Why You Might Be Interested In Bezeq The Israel Telecommunication Corp. Ltd (TLV:BEZQ) For Its Upcoming Dividend
It looks like Bezeq The Israel Telecommunication Corp. Ltd (TLV:BEZQ) is about to go ex-dividend in the next 3 days. The ex-dividend date is usually set to be one business day before the record date which is the cut-off date on which you must be present on the company’s books as a shareholder in order to receive the dividend. 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. This means that investors who purchase Bezeq The Israel Telecommunication’s shares on or after the 1st of May will not receive the dividend, which will be paid on the 9th of May.
The company’s next dividend payment will be ₪0.1351707 per share, and in the last 12 months, the company paid a total of ₪0.28 per share. Calculating the last year’s worth of payments shows that Bezeq The Israel Telecommunication has a trailing yield of 6.0% on the current share price of ₪4.605. 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 Bezeq The Israel Telecommunication has been able to grow its dividends, or if the dividend might be cut.
View our latest analysis for Bezeq The Israel Telecommunication
Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. Bezeq The Israel Telecommunication paid out more than half (64%) of its earnings last year, which is a regular payout ratio for most companies. Yet cash flow is typically more important than profit for assessing dividend sustainability, so we should always check if the company generated enough cash to afford its dividend. Fortunately, it paid out only 37% of its free cash flow in the past year.
It’s positive to see that Bezeq The Israel Telecommunication’s dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.
Click here to see the company’s payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. It’s encouraging to see Bezeq The Israel Telecommunication has grown its earnings rapidly, up 57% a year for the past five years. The current payout ratio suggests a good balance between rewarding shareholders with dividends, and reinvesting in growth. Earnings per share have been growing quickly and in combination with some reinvestment and a middling payout ratio, the stock may have decent dividend prospects going forwards.
Many investors will assess a company’s dividend performance by evaluating how much the dividend payments have changed over time. Bezeq The Israel Telecommunication has seen its dividend decline 8.2% per annum on average over the past 10 years, which is not great to see. Bezeq The Israel Telecommunication is a rare case where dividends have been decreasing at the same time as earnings per share have been improving. It’s unusual to see, and could point to unstable conditions in the core business, or more rarely an intensified focus on reinvesting profits.
The Bottom Line
Should investors buy Bezeq The Israel Telecommunication for the upcoming dividend? Bezeq The Israel Telecommunication’s growing earnings per share and conservative payout ratios make for a decent combination. We also like that it paid out a lower percentage of its cash flow. Overall we think this is an attractive combination and worthy of further research.
In light of that, while Bezeq The Israel Telecommunication has an appealing dividend, it’s worth knowing the risks involved with this stock. Our analysis shows 3 warning signs for Bezeq The Israel Telecommunication and you should be aware of these before buying any shares.
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Find out whether Bezeq The Israel Telecommunication is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.
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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.
