Don't Race Out To Buy Altshuler Shaham Finance Ltd (TLV:ALTF) Just Because It's Going Ex-Dividend

Altshuler Shaham Finance Ltd (TLV:ALTF) is about to trade ex-dividend in the next 3 days. The ex-dividend date is two business days before a company's record date in most cases, 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 at least 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, Altshuler Shaham Finance investors that purchase the stock on or after the 8th of September will not receive the dividend, which will be paid on the 17th of September.

The company's next dividend payment will be ₪0.0805538 per share, and in the last 12 months, the company paid a total of ₪0.41 per share. Based on the last year's worth of payments, Altshuler Shaham Finance has a trailing yield of 5.8% on the current stock price of ₪7.06. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

We've found 21 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free.

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Altshuler Shaham Finance paid out 63% of its earnings to investors last year, a normal payout level for most businesses.

Companies that pay out less in dividends than they earn in profits generally have more sustainable dividends. The lower the payout ratio, the more wiggle room the business has before it could be forced to cut the dividend.

Check out our latest analysis for Altshuler Shaham Finance

Click here to see how much of its profit Altshuler Shaham Finance 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 decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. So we're not too excited that Altshuler Shaham Finance's earnings are down 2.9% a year over the past five years.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Altshuler Shaham Finance has seen its dividend decline 20% per annum on average over the past four years, which is not great to see. It's never nice to see earnings and dividends falling, but at least management has cut the dividend rather than potentially risk the company's health in an attempt to maintain it.

The Bottom Line

Is Altshuler Shaham Finance worth buying for its dividend? We're not overly enthused to see Altshuler Shaham Finance's earnings in retreat at the same time as the company is paying out more than half of its earnings as dividends to shareholders. Altshuler Shaham Finance doesn't appear to have a lot going for it, and we're not inclined to take a risk on owning it for the dividend.

So if you're still interested in Altshuler Shaham Finance despite it's poor dividend qualities, you should be well informed on some of the risks facing this stock. For instance, we've identified 3 warning signs for Altshuler Shaham Finance (2 are potentially serious) you should be aware of.

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.