Is It Worth Considering Shaniv Paper Industry Ltd (TLV:SHAN) For Its Upcoming Dividend?

Readers hoping to buy Shaniv Paper Industry Ltd (TLV:SHAN) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. The ex-dividend date is usually set to be one business day before the record date which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the 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. In other words, investors can purchase Shaniv Paper Industry's shares before the 15th of July in order to be eligible for the dividend, which will be paid on the 22nd of July.

The company's upcoming dividend is ₪0.0396467 a share, following on from the last 12 months, when the company distributed a total of ₪0.13 per share to shareholders. Based on the last year's worth of payments, Shaniv Paper Industry has a trailing yield of 3.3% on the current stock price of ₪3.826. If you buy this business for its dividend, you should have an idea of whether Shaniv Paper Industry's dividend is reliable and sustainable. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

View our latest analysis for Shaniv Paper Industry

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. Shaniv Paper Industry paid out a comfortable 38% of its profit last year. A useful secondary check can be to evaluate whether Shaniv Paper Industry generated enough free cash flow to afford its dividend. It distributed 39% of its free cash flow as dividends, a comfortable payout level for most companies.

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 Shaniv Paper Industry 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 business enters a downturn and the dividend is cut, the company could see its value fall precipitously. With that in mind, we're encouraged by the steady growth at Shaniv Paper Industry, with earnings per share up 6.1% 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. Organisations that reinvest heavily in themselves typically get stronger over time, which can bring attractive benefits such as stronger earnings and dividends.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Shaniv Paper Industry has delivered an average of 5.5% per year annual increase in its dividend, based on the past 10 years of dividend payments. It's encouraging to see the company lifting dividends while earnings are growing, suggesting at least some corporate interest in rewarding shareholders.

The Bottom Line

Should investors buy Shaniv Paper Industry for the upcoming dividend? Earnings per share have been growing moderately, and Shaniv Paper Industry is paying out less than half its earnings and cash flow as dividends, which is an attractive combination as it suggests the company is investing in growth. We would prefer to see earnings growing faster, but the best dividend stocks over the long term typically combine significant earnings per share growth with a low payout ratio, and Shaniv Paper Industry is halfway there. There's a lot to like about Shaniv Paper Industry, and we would prioritise taking a closer look at it.

On that note, you'll want to research what risks Shaniv Paper Industry is facing. For example, we've found 4 warning signs for Shaniv Paper Industry (1 shouldn't be ignored!) that deserve your attention before investing in the shares.

A common investing mistake is buying the first interesting stock you see. Here you can find a full list of high-yield 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com