Three Days Left To Buy Electra Consumer Products (1970) Ltd (TLV:ECP) Before The Ex-Dividend Date

Some investors rely on dividends for growing their wealth, and if you're one of those dividend sleuths, you might be intrigued to know that Electra Consumer Products (1970) Ltd (TLV:ECP) is about to go ex-dividend in just three days. The ex-dividend date is commonly two business days 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 of consequence because whenever a stock is bought or sold, the trade can take two business days or more to settle. This means that investors who purchase Electra Consumer Products (1970)'s shares on or after the 7th of September will not receive the dividend, which will be paid on the 4th of October.

The company's next dividend payment will be ₪1.9655927 per share, and in the last 12 months, the company paid a total of ₪3.94 per share. Looking at the last 12 months of distributions, Electra Consumer Products (1970) has a trailing yield of approximately 5.7% on its current stock price of ₪69.56. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. As a result, readers should always check whether Electra Consumer Products (1970) has been able to grow its dividends, or if the dividend might be cut.

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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. Electra Consumer Products (1970) distributed an unsustainably high 117% of its profit as dividends to shareholders last year. Without more sustainable payment behaviour, the dividend looks precarious. That said, even highly profitable companies sometimes might not generate enough cash to pay the dividend, which is why we should always check if the dividend is covered by cash flow. The good news is it paid out just 25% of its free cash flow in the last year.

It's disappointing to see that the dividend was not covered by profits, but cash is more important from a dividend sustainability perspective, and Electra Consumer Products (1970) fortunately did generate enough cash to fund its dividend. Still, if the company repeatedly paid a dividend greater than its profits, we'd be concerned. Very few companies are able to sustainably pay dividends larger than their reported earnings.

See our latest analysis for Electra Consumer Products (1970)

Click here to see how much of its profit Electra Consumer Products (1970) paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. This is why it's a relief to see Electra Consumer Products (1970) earnings per share are up 5.8% per annum over the last five years.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Electra Consumer Products (1970) has delivered 2.0% dividend growth per year on average over the past 10 years.

The Bottom Line

Should investors buy Electra Consumer Products (1970) for the upcoming dividend? Earnings per share have grown modestly, and last year Electra Consumer Products (1970) paid out a low percentage of its cash flow. However, its dividend payments were not well covered by profits. All things considered, we are not particularly enthused about Electra Consumer Products (1970) from a dividend perspective.

However if you're still interested in Electra Consumer Products (1970) as a potential investment, you should definitely consider some of the risks involved with Electra Consumer Products (1970). For example, we've found 3 warning signs for Electra Consumer Products (1970) (2 shouldn't be ignored!) that deserve your attention before investing in the shares.

Generally, we wouldn't recommend just buying the first dividend stock you see. Here's a curated list of interesting stocks that are strong dividend payers.

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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.