Income Investors Should Know That Gav-Yam Lands Corp. Ltd (TLV:GVYM) Goes Ex-Dividend Soon

Gav-Yam Lands Corp. Ltd (TLV:GVYM) stock is about to trade ex-dividend in 3 days. The ex-dividend date occurs one day before the record date which is the day on which shareholders need to be on the company's books in order to receive a 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 Gav-Yam Lands' shares before the 12th of February in order to be eligible for the dividend, which will be paid on the 2nd of March.

The company's next dividend payment will be ₪0.2950878 per share, on the back of last year when the company paid a total of ₪1.23 to shareholders. Based on the last year's worth of payments, Gav-Yam Lands has a trailing yield of 3.9% on the current stock price of ₪31.72. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. So we need to investigate whether Gav-Yam Lands can afford its dividend, and if the dividend could grow.

Check out our latest analysis for Gav-Yam Lands

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Gav-Yam Lands paid out more than half (67%) of its earnings last year, which is a regular payout ratio for most companies. 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. Over the last year it paid out 65% of its free cash flow as dividends, within the usual range for most companies.

It's positive to see that Gav-Yam Lands'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 Gav-Yam Lands paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Stocks with flat earnings can still be attractive dividend payers, but it is important to be more conservative with your approach and demand a greater margin for safety when it comes to dividend sustainability. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. It's not encouraging to see that Gav-Yam Lands's earnings are effectively flat over the past five years. Better than seeing them fall off a cliff, for sure, but the best dividend stocks grow their earnings meaningfully over the long run. Earnings per share growth has been slim, and the company is already paying out a majority of its earnings. While there is some room to both increase the payout ratio and reinvest in the business, generally the higher a payout ratio goes, the lower a company's prospects for future growth.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Since the start of our data, 10 years ago, Gav-Yam Lands has lifted its dividend by approximately 8.4% a year on average.

Final Takeaway

Is Gav-Yam Lands an attractive dividend stock, or better left on the shelf? Gav-Yam Lands has struggled to grow its earnings per share, and while the company is paying out a majority of its earnings and cash flow in the form of dividends, the dividend payments don't appear unsustainable. Overall, it's not a bad combination, but we feel that there are likely more attractive dividend prospects out there.

If you want to look further into Gav-Yam Lands, it's worth knowing the risks this business faces. To help with this, we've discovered 3 warning signs for Gav-Yam Lands (1 makes us a bit uncomfortable!) that you ought to be aware of before buying the shares.

Generally, we wouldn't recommend just buying the first dividend stock you see. Here's a curated list of interesting stocks that are strong dividend payers.

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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.