Only Two Days Left To Cash In On Cohen Development Gas & Oil's (TLV:CDEV) Dividend

Cohen Development Gas & Oil Ltd. (TLV:CDEV) is about to trade ex-dividend in the next two days. The ex-dividend date is usually set to be one business day before the record date which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the dividend. The ex-dividend date is important because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend. Therefore, if you purchase Cohen Development Gas & Oil's shares on or after the 9th of June, you won't be eligible to receive the dividend, when it is paid on the 20th of June.

The company's upcoming dividend is US$1.67084 a share, following on from the last 12 months, when the company distributed a total of US$2.89 per share to shareholders. Last year's total dividend payments show that Cohen Development Gas & Oil has a trailing yield of 9.6% on the current share price of ₪112.00. 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! As a result, readers should always check whether Cohen Development Gas & Oil has been able to grow its dividends, or if the dividend might be cut.

View our latest analysis for Cohen Development Gas & Oil

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Its dividend payout ratio is 88% of profit, which means the company is paying out a majority of its earnings. The relatively limited profit reinvestment could slow the rate of future earnings growth. We'd be concerned if earnings began to decline. Yet cash flows are even more important than profits for assessing a dividend, so we need to see if the company generated enough cash to pay its distribution. The company paid out 104% of its free cash flow over the last year, which we think is outside the ideal range for most businesses. Cash flows are usually much more volatile than earnings, so this could be a temporary effect - but we'd generally want to look more closely here.

Cohen Development Gas & Oil paid out less in dividends than it reported in profits, but unfortunately it didn't generate enough cash to cover the dividend. Were this to happen repeatedly, this would be a risk to Cohen Development Gas & Oil's ability to maintain its dividend.

Click here to see how much of its profit Cohen Development Gas & Oil paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. That's why it's comforting to see Cohen Development Gas & Oil's earnings have been skyrocketing, up 31% per annum for the past five years. Earnings have been growing quickly, but we're concerned dividend payments consumed most of the company's cash flow over the past year.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. In the last nine years, Cohen Development Gas & Oil has lifted its dividend by approximately 11% 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

Should investors buy Cohen Development Gas & Oil for the upcoming dividend? It's good to see that earnings per share are growing and that the company's payout ratio is within a normal range for most businesses. However we're somewhat concerned that it paid out 104% of its cashflow, which is uncomfortably high. In summary, it's hard to get excited about Cohen Development Gas & Oil from a dividend perspective.

If you want to look further into Cohen Development Gas & Oil, it's worth knowing the risks this business faces. Every company has risks, and we've spotted 2 warning signs for Cohen Development Gas & Oil (of which 1 is significant!) 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.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.