Sella Capital Real Estate Ltd. (TLV:SLARL) Pays A ₪0.12 Dividend In Just One Day

Readers hoping to buy Sella Capital Real Estate Ltd. (TLV:SLARL) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. Ex-dividend means that investors that purchase the stock on or after the 8th of December will not receive this dividend, which will be paid on the 22nd of December.

Sella Capital Real Estate's next dividend payment will be ₪0.12 per share. Last year, in total, the company distributed ₪0.48 to shareholders. Based on the last year's worth of payments, Sella Capital Real Estate stock has a trailing yield of around 6.8% on the current share price of ₪7.11. 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! That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

Check out our latest analysis for Sella Capital Real Estate

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. Sella Capital Real Estate is paying out an acceptable 59% of its profit, a common payout level among 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. Dividends consumed 57% of the company's free cash flow last year, which is within a normal range for most dividend-paying organisations.

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 Sella Capital Real Estate paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. If earnings fall far enough, the company could be forced to cut its dividend. For this reason, we're glad to see Sella Capital Real Estate's earnings per share have risen 12% per annum over the last five years. Sella Capital Real Estate has an average payout ratio which suggests a balance between growing earnings and rewarding shareholders. Given the quick rate of earnings per share growth and current level of payout, there may be a chance of further dividend increases in the future.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Sella Capital Real Estate has delivered 4.8% dividend growth per year on average over the past 10 years. It's good to see both earnings and the dividend have improved - although the former has been rising much quicker than the latter, possibly due to the company reinvesting more of its profits in growth.

Final Takeaway

Should investors buy Sella Capital Real Estate for the upcoming dividend? It's good to see earnings are growing, since all of the best dividend stocks grow their earnings meaningfully over the long run. That's why we're glad to see Sella Capital Real Estate's earnings per share growing, although as we saw, the company is paying out more than half of its earnings and cashflow - 59% and 57% respectively. Overall, it's hard to get excited about Sella Capital Real Estate from a dividend perspective.

In light of that, while Sella Capital Real Estate has an appealing dividend, it's worth knowing the risks involved with this stock. For example, we've found 4 warning signs for Sella Capital Real Estate (1 is significant!) that deserve your attention before investing in the shares.

If you're in the market for dividend stocks, we recommend checking our list of top 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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