Yahoo Finance Don't Race Out To Buy Texas Community Bancshares, Inc. (NASDAQ:TCBS) Just Because It's Going Ex-Dividend
It looks like Texas Community Bancshares, Inc. (NASDAQ:TCBS) is about to go ex-dividend in the next 4 days. The ex-dividend date occurs one day before the record date which is the day on which shareholders need to be on the company's books in order 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 Texas Community Bancshares' shares before the 14th of June in order to be eligible for the dividend, which will be paid on the 28th of June.
The company's upcoming dividend is US$0.04 a share, following on from the last 12 months, when the company distributed a total of US$0.16 per share to shareholders. Based on the last year's worth of payments, Texas Community Bancshares has a trailing yield of 1.1% on the current stock price of US$14.31. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. So we need to check whether the dividend payments are covered, and if earnings are growing.
Check out our latest analysis for Texas Community Bancshares
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Texas Community Bancshares reported a loss last year, so it's not great to see that it has continued paying a dividend. Texas Community Bancshares paid a dividend despite reporting negative free cash flow over the last twelve months. This may be due to heavy investment in the business, but this is still suboptimal from a dividend sustainability perspective.
Click here to see how much of its profit Texas Community Bancshares 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. Texas Community Bancshares was unprofitable last year and, unfortunately, the general trend suggests its earnings have been in decline over the last three years, making us wonder if the dividend is sustainable at all.
Given that Texas Community Bancshares has only been paying a dividend for a year, there's not much of a past history to draw insight from.
Get our latest analysis on Texas Community Bancshares's balance sheet health here.
Final Takeaway
From a dividend perspective, should investors buy or avoid Texas Community Bancshares? 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.
So if you're still interested in Texas Community Bancshares despite it's poor dividend qualities, you should be well informed on some of the risks facing this stock. We've identified 2 warning signs with Texas Community Bancshares (at least 1 which is significant), and understanding these should be part of your investment process.
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.
