Be Sure To Check Out Harel Insurance Investments & Financial Services Ltd (TLV:HARL) Before It Goes Ex-Dividend

Harel Insurance Investments & Financial Services Ltd (TLV:HARL) stock is about to trade ex-dividend in three days. Typically, the ex-dividend date is two business days before the record date, which is the date on which a company determines the shareholders eligible to receive a dividend. The ex-dividend date is important because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend. Accordingly, Harel Insurance Investments & Financial Services investors that purchase the stock on or after the 7th of September will not receive the dividend, which will be paid on the 29th of September.

The company's next dividend payment will be ₪1.94 per share, and in the last 12 months, the company paid a total of ₪2.42 per share. Based on the last year's worth of payments, Harel Insurance Investments & Financial Services has a trailing yield of 2.3% on the current stock price of ₪105.70. If you buy this business for its dividend, you should have an idea of whether Harel Insurance Investments & Financial Services's dividend is reliable and sustainable. So we need to investigate whether Harel Insurance Investments & Financial Services can afford its dividend, and if the dividend could grow.

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Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. Harel Insurance Investments & Financial Services is paying out just 13% of its profit after tax, which is comfortably low and leaves plenty of breathing room in the case of adverse events.

When a company paid out less in dividends than it earned in profit, this generally suggests its dividend is affordable. The lower the % of its profit that it pays out, the greater the margin of safety for the dividend if the business enters a downturn.

See our latest analysis for Harel Insurance Investments & Financial Services

Click here to see how much of its profit Harel Insurance Investments & Financial Services 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. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. It's encouraging to see Harel Insurance Investments & Financial Services has grown its earnings rapidly, up 34% a year 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. In the last 10 years, Harel Insurance Investments & Financial Services has lifted its dividend by approximately 9.2% a year on average. We're glad to see dividends rising alongside earnings over a number of years, which may be a sign the company intends to share the growth with shareholders.

Final Takeaway

Is Harel Insurance Investments & Financial Services an attractive dividend stock, or better left on the shelf? When companies are growing rapidly and retaining a majority of the profits within the business, it's usually a sign that reinvesting earnings creates more value than paying dividends to shareholders. Perhaps even more importantly - this can sometimes signal management is focused on the long term future of the business. We think this is a pretty attractive combination, and would be interested in investigating Harel Insurance Investments & Financial Services more closely.

In light of that, while Harel Insurance Investments & Financial Services has an appealing dividend, it's worth knowing the risks involved with this stock. For example, Harel Insurance Investments & Financial Services has 3 warning signs (and 1 which is concerning) we think you should know about.

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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.