Is It Worth Considering Mivne Real Estate (K.D) Ltd (TLV:MVNE) For Its Upcoming Dividend?

Readers hoping to buy Mivne Real Estate (K.D) Ltd (TLV:MVNE) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. The ex-dividend date is one business day before the record date, which is the cut-off date for shareholders to be present on the company's books to be eligible for a dividend payment. 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. Thus, you can purchase Mivne Real Estate (K.D)'s shares before the 3rd of April in order to receive the dividend, which the company will pay on the 16th of April.

The company's next dividend payment will be ₪0.1218752 per share. Last year, in total, the company distributed ₪0.34 to shareholders. Calculating the last year's worth of payments shows that Mivne Real Estate (K.D) has a trailing yield of 3.8% on the current share price of ₪9.08. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. We need to see whether the dividend is covered by earnings and if it's growing.

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

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. That's why it's good to see Mivne Real Estate (K.D) paying out a modest 40% of its earnings. A useful secondary check can be to evaluate whether Mivne Real Estate (K.D) generated enough free cash flow to afford its dividend. It paid out 76% of its free cash flow as dividends, which is within usual limits but will limit the company's ability to lift the dividend if there's no growth.

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 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. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. 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.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. In the past four years, Mivne Real Estate (K.D) has increased its dividend at approximately 26% a year on average.

The Bottom Line

From a dividend perspective, should investors buy or avoid Mivne Real Estate (K.D)? Its earnings per share have been declining meaningfully, although it is paying out less than half its income and more than half its cash flow as dividends. Neither payout ratio appears an immediate concern, but we're concerned about the earnings. It might be worth researching if the company is reinvesting in growth projects that could grow earnings and dividends in the future, but for now we're not all that optimistic on its dividend prospects.

If you want to look further into Mivne Real Estate (K.D), it's worth knowing the risks this business faces. For instance, we've identified 3 warning signs for Mivne Real Estate (K.D) (1 is significant) you should be aware of.

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.