Only One Day Left To Cash In On Globrands' (TLV:GLRS) Dividend

Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Globrands Ltd. (TLV:GLRS) is about to trade ex-dividend in the next couple of days. 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 Globrands' shares before the 4th of December in order to receive the dividend, which the company will pay on the 12th of December.

The company's next dividend payment will be ₪24.410089 per share, on the back of last year when the company paid a total of ₪46.38 to shareholders. Based on the last year's worth of payments, Globrands stock has a trailing yield of around 9.9% on the current share price of ₪469.30. If you buy this business for its dividend, you should have an idea of whether Globrands'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 Globrands

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. That's why it's good to see Globrands paying out a modest 38% of its earnings. A useful secondary check can be to evaluate whether Globrands generated enough free cash flow to afford its dividend. It paid out 82% 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 Globrands paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Companies that aren't growing their earnings can still be valuable, but it is even more important to assess the sustainability of the dividend if it looks like the company will struggle to grow. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. With that in mind, we're not enthused to see that Globrands's earnings per share have remained 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. A payout ratio of 38% looks like a tacit signal from management that reinvestment opportunities in the business are low. In line with limited earnings growth in recent years, this is not the most appealing combination.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Globrands's dividend payments per share have declined at 1.6% per year on average over the past six years, which is uninspiring.

The Bottom Line

Is Globrands an attractive dividend stock, or better left on the shelf? Globrands has struggled to grow earnings per share, and it's paying out less than half of its earnings and more than half its cash flow to shareholders as dividends. Overall, it's hard to get excited about Globrands from a dividend perspective.

On that note, you'll want to research what risks Globrands is facing. For example, we've found 3 warning signs for Globrands (1 can'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.