G. Willi-Food International (NASDAQ:WILC) Is Reducing Its Dividend To ₪0.43

G. Willi-Food International Ltd. (NASDAQ:WILC) is reducing its dividend from last year's comparable payment to ₪0.43 on the 21st of September. The yield is still above the industry average at 5.0%.

Check out our latest analysis for G. Willi-Food International

G. Willi-Food International's Dividend Is Well Covered By Earnings

A big dividend yield for a few years doesn't mean much if it can't be sustained. Based on the last payment, the company wasn't making enough to cover what it was paying to shareholders. It will be difficult to sustain this level of payout so we wouldn't be confident about this continuing.

Over the next year, EPS could expand by 45.5% if recent trends continue. Under the assumption that the dividend will continue along recent trends, we think the payout ratio could be 33% which would be quite comfortable going to take the dividend forward.

Dividend Volatility

The company has a long dividend track record, but it doesn't look great with cuts in the past. Since 2012, the annual payment back then was ₪0.98, compared to the most recent full-year payment of ₪2.9. This implies that the company grew its distributions at a yearly rate of about 11% over that duration. Despite the rapid growth in the dividend over the past number of years, we have seen the payments go down the past as well, so that makes us cautious.

G. Willi-Food International's Dividend Might Lack Growth

Given that the dividend has been cut in the past, we need to check if earnings are growing and if that might lead to stronger dividends in the future. We are encouraged to see that G. Willi-Food International has grown earnings per share at 46% per year over the past five years. Although earnings per share is up nicely G. Willi-Food International is paying out 141% of its earnings as dividends, which we feel is borderline unsustainable without extenuating circumstances.

G. Willi-Food International's Dividend Doesn't Look Sustainable

Overall, it's not great to see that the dividend has been cut, but this might be explained by the payments being a bit high previously. While we generally think the level of distributions are a bit high, we wouldn't rule it out as becoming a good dividend payer in the future as its earnings are growing healthily. We would be a touch cautious of relying on this stock primarily for the dividend income.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. However, there are other things to consider for investors when analysing stock performance. For example, we've identified 3 warning signs for G. Willi-Food International (1 is significant!) that you should be aware of before investing. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

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