Strauss Group Ltd. (TLV:STRS) Passed Our Checks, And It's About To Pay A ₪0.60 Dividend

It looks like Strauss Group Ltd. (TLV:STRS) is about to go ex-dividend in the next 2 days. You can purchase shares before the 31st of December in order to receive the dividend, which the company will pay on the 14th of January.

Strauss Group's next dividend payment will be ₪0.60 per share, and in the last 12 months, the company paid a total of ₪1.55 per share. Looking at the last 12 months of distributions, Strauss Group has a trailing yield of approximately 1.6% on its current stock price of ₪95.7. If you buy this business for its dividend, you should have an idea of whether Strauss Group's dividend is reliable and sustainable. As a result, readers should always check whether Strauss Group has been able to grow its dividends, or if the dividend might be cut.

Check out our latest analysis for Strauss Group

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. Strauss Group paid out a comfortable 32% of its profit last year. 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. It distributed 34% of its free cash flow as dividends, a comfortable payout level for most companies.

It's positive to see that Strauss Group'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 Strauss Group 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. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. For this reason, we're glad to see Strauss Group's earnings per share have risen 17% per annum over the last five years. The company has managed to grow earnings at a rapid rate, while reinvesting most of the profits within the business. Fast-growing businesses that are reinvesting heavily are enticing from a dividend perspective, especially since they can often increase the payout ratio later.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Strauss Group's dividend payments per share have declined at 8.5% per year on average over the past 10 years, which is uninspiring. It's unusual to see earnings per share increasing at the same time as dividends per share have been in decline. We'd hope it's because the company is reinvesting heavily in its business, but it could also suggest business is lumpy.

To Sum It Up

Should investors buy Strauss Group for the upcoming dividend? Strauss Group has grown its earnings per share while simultaneously reinvesting in the business. Unfortunately it's cut the dividend at least once in the past 10 years, but the conservative payout ratio makes the current dividend look sustainable. Strauss Group looks solid on this analysis overall, and we'd definitely consider investigating it more closely.

In light of that, while Strauss Group has an appealing dividend, it's worth knowing the risks involved with this stock. Our analysis shows 1 warning sign for Strauss Group and you should be aware of it before buying any shares.

We wouldn't recommend just buying the first dividend stock you see, though. Here's a list of interesting dividend stocks with a greater than 2% yield and an upcoming dividend.

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This article by Simply Wall St is general in nature. 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.
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