N.R. Spuntech Industries Ltd. (TLV:SPNTC) Stock Goes Ex-Dividend In Just Three Days

It looks like N.R. Spuntech Industries Ltd. (TLV:SPNTC) is about to go ex-dividend in the next three days. This means that investors who purchase shares on or after the 12th of January will not receive the dividend, which will be paid on the 24th of January.

The upcoming dividend for N.R. Spuntech Industries is ₪0.60 per share, increased from last year's total dividends per share of ₪0.45. 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 N.R. Spuntech Industries has been able to grow its dividends, or if the dividend might be cut.

See our latest analysis for N.R. Spuntech Industries

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. It paid out 75% of its earnings as dividends last year, which is not unreasonable, but limits reinvestment in the business and leaves the dividend vulnerable to a business downturn. It could become a concern if earnings started to decline. A useful secondary check can be to evaluate whether N.R. Spuntech Industries generated enough free cash flow to afford its dividend. Dividends consumed 53% of the company's free cash flow last year, which is within a normal range for most dividend-paying organisations.

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 N.R. Spuntech Industries 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. This is why it's a relief to see N.R. Spuntech Industries earnings per share are up 5.2% per annum over the last five years. While earnings have been growing at a credible rate, the company is paying out a majority of its earnings to shareholders. If management lifts the payout ratio further, we'd take this as a tacit signal that the company's growth prospects are slowing.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. It looks like the N.R. Spuntech Industries dividends are largely the same as they were 10 years ago.

The Bottom Line

Should investors buy N.R. Spuntech Industries for the upcoming dividend? Earnings per share have been growing modestly and N.R. Spuntech Industries paid out a bit over half of its earnings and free cash flow last year. It might be worth researching if the company is reinvesting in growth projects that could grow earnings and dividends in the future, but for now we're not all that optimistic on its dividend prospects.

With that being said, if dividends aren't your biggest concern with N.R. Spuntech Industries, you should know about the other risks facing this business. Our analysis shows 3 warning signs for N.R. Spuntech Industries that we strongly recommend you have a look at before investing in the company.

If you're in the market for dividend stocks, we recommend checking our list of top 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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