There’s A Lot To Like About Meshulam Levinstein Contracting & Engineering’s (TLV:LEVI) Upcoming ₪3.00 Dividend

Readers hoping to buy Meshulam Levinstein Contracting & Engineering Ltd. (TLV:LEVI) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. 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. It is important to be aware of the ex-dividend date because any trade on the stock needs to have been settled on or before the record date. In other words, investors can purchase Meshulam Levinstein Contracting & Engineering’s shares before the 7th of September in order to be eligible for the dividend, which will be paid on the 14th of September.

The company’s next dividend payment will be ₪3.00 per share. Last year, in total, the company distributed ₪5.00 to shareholders. Calculating the last year’s worth of payments shows that Meshulam Levinstein Contracting & Engineering has a trailing yield of 1.8% on the current share price of ₪341.5. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. We need to see whether the dividend is covered by earnings and if it’s growing.

Check out our latest analysis for Meshulam Levinstein Contracting & Engineering

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. Meshulam Levinstein Contracting & Engineering paid out just 7.3% of its profit last year, which we think is conservatively low and leaves plenty of margin for unexpected circumstances. Yet cash flows are even more important than profits for assessing a dividend, so we need to see if the company generated enough cash to pay its distribution. Luckily it paid out just 10% of its free cash flow last year.

It’s encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don’t drop precipitously.

Click here to see how much of its profit Meshulam Levinstein Contracting & Engineering paid out over the last 12 months.

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 earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. It’s encouraging to see Meshulam Levinstein Contracting & Engineering has grown its earnings rapidly, up 29% a year for the past five years. Meshulam Levinstein Contracting & Engineering looks like a real growth company, with earnings per share growing at a cracking pace and the company reinvesting most of its profits in the business.

The main way most investors will assess a company’s dividend prospects is by checking the historical rate of dividend growth. In the last eight years, Meshulam Levinstein Contracting & Engineering has lifted its dividend by approximately 15% a year on average. It’s great to see earnings per share growing rapidly over several years, and dividends per share growing right along with it.

To Sum It Up

Has Meshulam Levinstein Contracting & Engineering got what it takes to maintain its dividend payments? It’s great that Meshulam Levinstein Contracting & Engineering is growing earnings per share while simultaneously paying out a low percentage of both its earnings and cash flow. It’s disappointing to see the dividend has been cut at least once in the past, but as things stand now, the low payout ratio suggests a conservative approach to dividends, which we like. Meshulam Levinstein Contracting & Engineering looks solid on this analysis overall, and we’d definitely consider investigating it more closely.

On that note, you’ll want to research what risks Meshulam Levinstein Contracting & Engineering is facing. For instance, we’ve identified 2 warning signs for Meshulam Levinstein Contracting & Engineering (1 is concerning) 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.