Why You Might Be Interested In NewMed Energy - Limited Partnership (TLV:NWMD) For Its Upcoming Dividend

Readers hoping to buy NewMed Energy - Limited Partnership (TLV:NWMD) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. The ex-dividend date is commonly two business days before the record date, which is the cut-off date for shareholders to be present on the company's books to be eligible for a dividend payment. The ex-dividend date is of consequence because whenever a stock is bought or sold, the trade can take two business days or more to settle. Therefore, if you purchase NewMed Energy - Limited Partnership's shares on or after the 20th of March, you won't be eligible to receive the dividend, when it is paid on the 3rd of April.

The company's next dividend payment will be US$0.05112 per share, on the back of last year when the company paid a total of US$0.18 to shareholders. Last year's total dividend payments show that NewMed Energy - Limited Partnership has a trailing yield of 5.0% on the current share price of ₪13.12. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. We need to see whether the dividend is covered by earnings and if it's growing.

View 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. That's why it's good to see NewMed Energy - Limited Partnership paying out a modest 50% of its earnings. A useful secondary check can be to evaluate whether NewMed Energy - Limited Partnership generated enough free cash flow to afford its dividend. Over the last year it paid out 54% of its free cash flow as dividends, within the usual range for most companies.

It's positive to see that NewMed Energy - Limited Partnership's dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.

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?

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 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 NewMed Energy - Limited Partnership's earnings have been skyrocketing, up 34% per annum 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. It looks like the NewMed Energy - Limited Partnership dividends are largely the same as they were 10 years ago.

To Sum It Up

Has NewMed Energy - Limited Partnership got what it takes to maintain its dividend payments? Earnings per share have grown at a nice rate in recent times and over the last year, NewMed Energy - Limited Partnership paid out less than half its earnings and a bit over half its free cash flow. There's a lot to like about NewMed Energy - Limited Partnership, and we would prioritise taking a closer look at it.

While it's tempting to invest in NewMed Energy - Limited Partnership for the dividends alone, you should always be mindful of the risks involved. Our analysis shows 2 warning signs for NewMed Energy - Limited Partnership and you should be aware of these before buying any shares.

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.