Only Three Days Left To Cash In On Delek Group's (TLV:DLEKG) Dividend

Delek Group Ltd. (TLV:DLEKG) is about to trade ex-dividend in the next three 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. 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 Delek Group's shares on or after the 9th of April will not receive the dividend, which will be paid on the 21st of April.

The company's next dividend payment will be ₪13.5074 per share, and in the last 12 months, the company paid a total of ₪43.23 per share. Looking at the last 12 months of distributions, Delek Group has a trailing yield of approximately 9.7% on its current stock price of ₪445.10. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. As a result, readers should always check whether Delek Group has been able to grow its dividends, or if the dividend might be cut.

See our latest analysis for Delek Group

Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. Delek Group paid out a disturbingly high 201% of its profit as dividends last year, which makes us concerned there's something we don't fully understand in the business. That said, even highly profitable companies sometimes might not generate enough cash to pay the dividend, which is why we should always check if the dividend is covered by cash flow. Thankfully its dividend payments took up just 27% of the free cash flow it generated, which is a comfortable payout ratio.

It's disappointing to see that the dividend was not covered by profits, but cash is more important from a dividend sustainability perspective, and Delek Group fortunately did generate enough cash to fund its dividend. If executives were to continue paying more in dividends than the company reported in profits, we'd view this as a warning sign. Extraordinarily few companies are capable of persistently paying a dividend that is greater than their profits.

Click here to see how much of its profit Delek Group 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 fall far enough, the company could be forced to cut its dividend. It's encouraging to see Delek Group has grown its earnings rapidly, up 52% a year for the past five years.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Delek Group has seen its dividend decline 0.7% per annum on average over the past 10 years, which is not great to see.

Final Takeaway

Is Delek Group an attractive dividend stock, or better left on the shelf? Earnings per share have been rising nicely although, even though its cashflow payout ratio is low, we question why Delek Group is paying out so much of its profit. In summary, it's hard to get excited about Delek Group from a dividend perspective.

On that note, you'll want to research what risks Delek Group is facing. In terms of investment risks, we've identified 4 warning signs with Delek Group and understanding them should be part of your investment process.

If you're in the market for strong dividend payers, we recommend checking our selection of top dividend stocks.

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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.