Dividend Investors: Don't Be Too Quick To Buy Mivne Real Estate (K.D) Ltd (TLV:MVNE) For Its Upcoming Dividend

It looks like Mivne Real Estate (K.D) Ltd (TLV:MVNE) is about to go ex-dividend in the next 3 days. 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. The ex-dividend date is important as the process of settlement involves two full business days. So if you miss that date, you would not show up on the company's books on the record date. Thus, you can purchase Mivne Real Estate (K.D)'s shares before the 3rd of December in order to receive the dividend, which the company will pay on the 17th of December.

The company's next dividend payment will be ₪0.0676846 per share, and in the last 12 months, the company paid a total of ₪0.34 per share. Looking at the last 12 months of distributions, Mivne Real Estate (K.D) has a trailing yield of approximately 3.2% on its current stock price of ₪10.86. 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 Mivne Real Estate (K.D) has been able to grow its dividends, or if the dividend might be cut.

See our latest analysis for Mivne Real Estate (K.D)

Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. It paid out 78% 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. We'd be worried about the risk of a drop in earnings. That said, even highly profitable companies sometimes might not generate enough cash to pay the dividend, which is why we should always check if the dividend is covered by cash flow. Fortunately, it paid out only 46% of its free cash flow in the past year.

It's positive to see that Mivne Real Estate (K.D)'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 Mivne Real Estate (K.D) paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Businesses with shrinking earnings are tricky from a dividend perspective. If earnings fall far enough, the company could be forced to cut its dividend. With that in mind, we're discomforted by Mivne Real Estate (K.D)'s 10% per annum decline in earnings in the past five years. When earnings per share fall, the maximum amount of dividends that can be paid also falls.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Mivne Real Estate (K.D) has delivered an average of 26% per year annual increase in its dividend, based on the past four years of dividend payments. That's intriguing, but the combination of growing dividends despite declining earnings can typically only be achieved by paying out a larger percentage of profits. Mivne Real Estate (K.D) is already paying out 78% of its profits, and with shrinking earnings we think it's unlikely that this dividend will grow quickly in the future.

To Sum It Up

Has Mivne Real Estate (K.D) got what it takes to maintain its dividend payments? We're not enthused by the declining earnings per share, although at least the company's payout ratio is within a reasonable range, meaning it may not be at imminent risk of a dividend cut. All things considered, we are not particularly enthused about Mivne Real Estate (K.D) from a dividend perspective.

So if you want to do more digging on Mivne Real Estate (K.D), you'll find it worthwhile knowing the risks that this stock faces. For example, Mivne Real Estate (K.D) has 4 warning signs (and 2 which are potentially serious) we think you should know about.

If you're in the market for strong dividend payers, we recommend checking our selection of top 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.