Be Sure To Check Out Kafrit Industries (1993) Ltd (TLV:KAFR) Before It Goes Ex-Dividend

Kafrit Industries (1993) Ltd (TLV:KAFR) is about to trade ex-dividend in the next three days. This means that investors who purchase shares on or after the 7th of December will not receive the dividend, which will be paid on the 24th of December.

Kafrit Industries (1993)'s upcoming dividend is ₪0.15 a share, following on from the last 12 months, when the company distributed a total of ₪0.50 per share to shareholders. Last year's total dividend payments show that Kafrit Industries (1993) has a trailing yield of 3.1% on the current share price of ₪18.79. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! As a result, readers should always check whether Kafrit Industries (1993) has been able to grow its dividends, or if the dividend might be cut.

View our latest analysis for Kafrit Industries (1993)

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. Fortunately Kafrit Industries (1993)'s payout ratio is modest, at just 27% of profit. 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. Thankfully its dividend payments took up just 47% of the free cash flow it generated, which is a comfortable payout ratio.

It's positive to see that Kafrit Industries (1993)'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 Kafrit Industries (1993) 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 fall far enough, the company could be forced to cut its dividend. With that in mind, we're encouraged by the steady growth at Kafrit Industries (1993), with earnings per share up 5.5% on average over the last five years. Management have been reinvested more than half of the company's earnings within the business, and the company has been able to grow earnings with this retained capital. We think this is generally an attractive combination, as dividends can grow through a combination of earnings growth and or a higher payout ratio over time.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Since the start of our data, 10 years ago, Kafrit Industries (1993) has lifted its dividend by approximately 2.6% 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

From a dividend perspective, should investors buy or avoid Kafrit Industries (1993)? Earnings per share growth has been growing somewhat, and Kafrit Industries (1993) is paying out less than half its earnings and cash flow as dividends. This is interesting for a few reasons, as it suggests management may be reinvesting heavily in the business, but it also provides room to increase the dividend in time. It might be nice to see earnings growing faster, but Kafrit Industries (1993) is being conservative with its dividend payouts and could still perform reasonably over the long run. Kafrit Industries (1993) looks solid on this analysis overall, and we'd definitely consider investigating it more closely.

On that note, you'll want to research what risks Kafrit Industries (1993) is facing. Every company has risks, and we've spotted 4 warning signs for Kafrit Industries (1993) (of which 1 makes us a bit uncomfortable!) you should know about.

A common investment mistake is buying the first interesting stock you see. Here you can find a list of promising 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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