Four Days Left To Buy NewMed Energy - Limited Partnership (TLV:NWMD) Before The Ex-Dividend Date

Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see NewMed Energy - Limited Partnership (TLV:NWMD) is about to trade ex-dividend in the next 4 days. 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. The ex-dividend date is important as the process of settlement involves two full business days. So if you miss that date, you would not show up on the company's books on the record date. This means that investors who purchase NewMed Energy - Limited Partnership's shares on or after the 25th of August will not receive the dividend, which will be paid on the 5th of September.

The company's next dividend payment will be US$0.05538 per share. Last year, in total, the company distributed US$0.18 to shareholders. Looking at the last 12 months of distributions, NewMed Energy - Limited Partnership has a trailing yield of approximately 7.1% on its current stock price of ₪9.307. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. We need to see whether the dividend is covered by earnings and if it's growing.

See our latest analysis for NewMed Energy - Limited Partnership

Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. NewMed Energy - Limited Partnership paid out 51% of its earnings to investors last year, a normal payout level for most businesses. 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. It paid out more than half (67%) of its free cash flow in the past year, which is within an average range for most companies.

It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.

Click here to see how much of its profit NewMed Energy - Limited Partnership paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. For this reason, we're glad to see NewMed Energy - Limited Partnership's earnings per share have risen 11% per annum over the last five years. NewMed Energy - Limited Partnership is paying out a bit over half its earnings, which suggests the company is striking a balance between reinvesting in growth, and paying dividends. This is a reasonable combination that could hint at some further dividend increases in the future.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. NewMed Energy - Limited Partnership's dividend payments are effectively flat on where they were nine years ago.

To Sum It Up

From a dividend perspective, should investors buy or avoid NewMed Energy - Limited Partnership? It's good to see earnings are growing, since all of the best dividend stocks grow their earnings meaningfully over the long run. That's why we're glad to see NewMed Energy - Limited Partnership's earnings per share growing, although as we saw, the company is paying out more than half of its earnings and cashflow - 51% and 67% respectively. While it does have some good things going for it, we're a bit ambivalent and it would take more to convince us of NewMed Energy - Limited Partnership's dividend merits.

With that in mind, a critical part of thorough stock research is being aware of any risks that stock currently faces. To help with this, we've discovered 3 warning signs for NewMed Energy - Limited Partnership (1 is a bit concerning!) that you ought to be aware of before buying the shares.

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.