Regular readers will know that we love our dividends at Simply Wall St, which is why it’s exciting to see The Gold Bond Group Ltd. (TLV:GOLD) is about to trade ex-dividend in the next two 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 as the settlement process 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. Therefore, if you purchase Gold Bond Group’s shares on or after the 1st of April, you won’t be eligible to receive the dividend, when it is paid on the 11th of April.
The company’s upcoming dividend is ₪0.80 a share, following on from the last 12 months, when the company distributed a total of ₪2.19 per share to shareholders. Looking at the last 12 months of distributions, Gold Bond Group has a trailing yield of approximately 1.8% on its current stock price of ₪123.40. If you buy this business for its dividend, you should have an idea of whether Gold Bond Group’s dividend is reliable and sustainable. As a result, readers should always check whether Gold Bond Group has been able to grow its dividends, or if the dividend might be cut.
View our latest analysis for Gold Bond Group
If a company pays out more in dividends than it earned, then the dividend might become unsustainable – hardly an ideal situation. Gold Bond Group paid out just 1.4% of its profit last year, which we think is conservatively low and leaves plenty of margin for unexpected circumstances. 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, he paid out only 26% of his free cash flow in the 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 Gold Bond Group paid out over the last 12 months.
Have Earnings And Dividends Been Growing?
Businesses with shrinking earnings are tricky from a dividend perspective. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. That’s why it’s not ideal to see Gold Bond Group’s earnings per share have been shrinking at 3.1% a year over the previous five years.
Many investors will assess a company’s dividend performance by evaluating how much the dividend payments have changed over time. Gold Bond Group’s dividend payments per share have declined at 6.1% per year on average over the past seven years, which is uninspiring. 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
From a dividend perspective, should investors buy or avoid Gold Bond Group? Earnings per share are down meaningfully, although at least the company is paying out a low and conservative percentage of both its earnings and cash flow. It’s definitely not great to see earnings falling, but at least there may be some buffer before the dividend needs to be cut. Overall we’re not hugely bearish on the stock, but there are likely better dividend investments out there.
Curious about whether Gold Bond Group has been able to consistently generate growth? Here’s a chart of its historical revenue and earnings growth.
If you’re in the market for strong dividend payers, we recommend checking our selection of top 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.
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