Income Investors Should Know That Kerur Holdings Ltd. (TLV:KRUR) Goes Ex-Dividend Soon

Some investors rely on dividends for growing their wealth, and if you're one of those dividend sleuths, you might be intrigued to know that Kerur Holdings Ltd. (TLV:KRUR) is about to go ex-dividend in just day or so. Typically, the ex-dividend date is one business day before the record date which is the date on which a company determines the shareholders eligible 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. Meaning, you will need to purchase Kerur Holdings' shares before the 30th of December to receive the dividend, which will be paid on the 7th of January.

The company's next dividend payment will be ₪2.7827394 per share, on the back of last year when the company paid a total of ₪3.98 to shareholders. Based on the last year's worth of payments, Kerur Holdings stock has a trailing yield of around 5.1% on the current share price of ₪77.97. If you buy this business for its dividend, you should have an idea of whether Kerur Holdings's dividend is reliable and sustainable. As a result, readers should always check whether Kerur Holdings has been able to grow its dividends, or if the dividend might be cut.

Check out our latest analysis for Kerur Holdings

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. Kerur Holdings paid out just 10% of its profit last year, which we think is conservatively low and leaves plenty of margin for unexpected circumstances. Yet cash flow is typically more important than profit for assessing dividend sustainability, so we should always check if the company generated enough cash to afford its dividend. Fortunately, it paid out only 45% of its free cash flow in the past year.

It's positive to see that Kerur Holdings'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 Kerur Holdings paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Companies that aren't growing their earnings can still be valuable, but it is even more important to assess the sustainability of the dividend if it looks like the company will struggle to grow. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. That explains why we're not overly excited about Kerur Holdings's flat earnings over the past five years. It's better than seeing them drop, certainly, but over the long term, all of the best dividend stocks are able to meaningfully grow their earnings per share. Recent earnings growth has been limited. However, companies that see their growth slow can often choose to pay out a greater percentage of earnings to shareholders, which could see the dividend continue to rise.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Kerur Holdings has delivered 10% dividend growth per year on average over the past seven years.

To Sum It Up

From a dividend perspective, should investors buy or avoid Kerur Holdings? The company has barely grown earnings per share over this time, but at least it's paying out a decently low percentage of its earnings and cashflow as dividends. This could suggest management is reinvesting in future growth opportunities. Generally we like to see both low payout ratios and strong earnings per share growth, but Kerur Holdings is halfway there. Kerur Holdings looks solid on this analysis overall, and we'd definitely consider investigating it more closely.

In light of that, while Kerur Holdings has an appealing dividend, it's worth knowing the risks involved with this stock. For instance, we've identified 2 warning signs for Kerur Holdings (1 doesn't sit too well with us) you should be aware of.

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.