Why It Might Not Make Sense To Buy Eldav Investments Ltd. (TLV:ELDAV-M) For Its Upcoming Dividend

Eldav Investments Ltd. (TLV:ELDAV-M) stock is about to trade ex-dividend in 3 days. The ex-dividend date is one business day before a company’s record date, which is the date on which the company determines which shareholders are entitled 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. In other words, investors can purchase Eldav Investments’ shares before the 25th of August in order to be eligible for the dividend, which will be paid on the 1st of September.

The company’s next dividend payment will be ₪0.0279484 per share, and in the last 12 months, the company paid a total of ₪0.17 per share. Looking at the last 12 months of distributions, Eldav Investments has a trailing yield of approximately 7.3% on its current stock price of ₪2.353. 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! So we need to check whether the dividend payments are covered, and if earnings are growing.

See our latest analysis for Eldav Investments

If a company pays out more in dividends than it earned, then the dividend might become unsustainable – hardly an ideal situation. Eldav Investments paid a dividend last year despite being unprofitable. This might be a one-off event, but it’s not a sustainable state of affairs in the long run.

Click here to see how much of its profit Eldav Investments paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Companies with falling earnings are riskier for dividend shareholders. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. Eldav Investments was unprofitable last year and, unfortunately, the general trend suggests its earnings have been in decline over the last five years, making us wonder if the dividend is sustainable at all.

The main way most investors will assess a company’s dividend prospects is by checking the historical rate of dividend growth. Eldav Investments has delivered 2.1% dividend growth per year on average over the past 10 years.

Get our latest analysis on Eldav Investments’s balance sheet health here.

Final Takeaway

From a dividend perspective, should investors buy or avoid Eldav Investments? It’s definitely not great to see that it paid a dividend despite reporting a loss last year. Worse, the general trend in its earnings looks negative in recent times. This is not an overtly appealing combination of characteristics, and we’re just not that interested in this company’s dividend.

Although, if you’re still interested in Eldav Investments and want to know more, you’ll find it very useful to know what risks this stock faces. To help with this, we’ve discovered 4 warning signs for Eldav Investments (3 are concerning!) that you ought to be aware of before buying 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.