Here's What We Like About S.R. Accord's (TLV:SRAC) Upcoming Dividend

Simply Wall St
March 21, 2022
Source: Shutterstock

Readers hoping to buy S.R. Accord Ltd. (TLV:SRAC) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. The ex-dividend date occurs one day before the record date which is the day on which shareholders need to be on the company's books in order to receive a dividend. It is important to be aware of the ex-dividend date because any trade on the stock needs to have been settled on or before the record date. This means that investors who purchase S.R. Accord's shares on or after the 24th of March will not receive the dividend, which will be paid on the 5th of April.

The company's next dividend payment will be ₪0.30 per share. Last year, in total, the company distributed ₪2.36 to shareholders. Last year's total dividend payments show that S.R. Accord has a trailing yield of 3.9% on the current share price of ₪61.02. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! So we need to investigate whether S.R. Accord can afford its dividend, and if the dividend could grow.

Check out our latest analysis for S.R. Accord

Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. S.R. Accord paid out more than half (51%) of its earnings last year, which is a regular payout ratio for most companies. S.R. Accord paid a dividend despite reporting negative free cash flow over the last twelve months. This may be due to heavy investment in the business, but this is still suboptimal from a dividend sustainability perspective.

Companies that pay out less in dividends than they earn in profits generally have more sustainable dividends. The lower the payout ratio, the more wiggle room the business has before it could be forced to cut the dividend.

Click here to see how much of its profit S.R. Accord paid out over the last 12 months.

TASE:SRAC Historic Dividend March 21st 2022

Have Earnings And Dividends Been Growing?

Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. Fortunately for readers, S.R. Accord's earnings per share have been growing at 12% a year for the past five years.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Since the start of our data, six years ago, S.R. Accord has lifted its dividend by approximately 19% a year on average. Both per-share earnings and dividends have both been growing rapidly in recent times, which is great to see.

To Sum It Up

From a dividend perspective, should investors buy or avoid S.R. Accord? Earnings per share are growing at an attractive rate, and S.R. Accord is paying out a bit over half its profits. Overall, S.R. Accord looks like a promising dividend stock in this analysis, and we think it would be worth investigating further.

In light of that, while S.R. Accord has an appealing dividend, it's worth knowing the risks involved with this stock. For example, S.R. Accord has 2 warning signs (and 1 which shouldn't be ignored) we think you should know about.

Generally, we wouldn't recommend just buying the first dividend stock you see. Here's a curated list of interesting stocks that are strong dividend payers.

Discounted cash flow calculation for every stock

Simply Wall St does a detailed discounted cash flow calculation every 6 hours for every stock on the market, so if you want to find the intrinsic value of any company just search here. It’s FREE.

Make Confident Investment Decisions

Simply Wall St's Editorial Team provides unbiased, factual reporting on global stocks using in-depth fundamental analysis.
Find out more about our editorial guidelines and team.