iCon Group Ltd (TLV:ICON) Is About To Go Ex-Dividend, And It Pays A 3.4% Yield

iCon Group Ltd (TLV:ICON) stock is about to trade ex-dividend in two 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. 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. Accordingly, iCon Group investors that purchase the stock on or after the 4th of April will not receive the dividend, which will be paid on the 11th of April.

The company's next dividend payment will be ₪0.2991408 per share, and in the last 12 months, the company paid a total of ₪0.18 per share. Calculating the last year's worth of payments shows that iCon Group has a trailing yield of 3.4% on the current share price of ₪5.141. 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 iCon Group has been able to grow its dividends, or if the dividend might be cut.

Check out our latest analysis for iCon Group

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Fortunately iCon Group's payout ratio is modest, at just 29% of profit. A useful secondary check can be to evaluate whether iCon Group generated enough free cash flow to afford its dividend. What's good is that dividends were well covered by free cash flow, with the company paying out 24% of its cash flow last year.

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 iCon Group paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

When earnings decline, dividend companies become much harder to analyse and own safely. If earnings fall far enough, the company could be forced to cut its dividend. Readers will understand then, why we're concerned to see iCon Group's earnings per share have dropped 14% a year over the past five years. When earnings per share fall, the maximum amount of dividends that can be paid also falls.

Given that iCon Group has only been paying a dividend for a year, there's not much of a past history to draw insight from.

To Sum It Up

Has iCon Group got what it takes to maintain its dividend payments? Earnings per share are down meaningfully, although at least the company is paying out a low and conservative percentage of both its earnings and cash flow. It's definitely not great to see earnings falling, but at least there may be some buffer before the dividend needs to be cut. While it does have some good things going for it, we're a bit ambivalent and it would take more to convince us of iCon Group's dividend merits.

While it's tempting to invest in iCon Group for the dividends alone, you should always be mindful of the risks involved. Our analysis shows 3 warning signs for iCon Group and you should be aware of these before buying any shares.

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.