Yahoo Finance There's A Lot To Like About Signature Bank's (NASDAQ:SBNY) Upcoming 0.5% Dividend
Signature Bank (NASDAQ:SBNY) is about to trade ex-dividend in the next 4 days. This means that investors who purchase shares on or after the 31st of July will not receive the dividend, which will be paid on the 15th of August.
Signature Bank's next dividend payment will be US$0.56 per share. Last year, in total, the company distributed US$2.24 to shareholders. Based on the last year's worth of payments, Signature Bank has a trailing yield of 1.8% on the current stock price of $123.98. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. So we need to check whether the dividend payments are covered, and if earnings are growing.
View our latest analysis for Signature Bank
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. Signature Bank paid out just 15% of its profit last year, which we think is conservatively low and leaves plenty of margin for unexpected circumstances.
When a company paid out less in dividends than it earned in profit, this generally suggests its dividend is affordable. The lower the % of its profit that it pays out, the greater the margin of safety for the dividend if the business enters a downturn.
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
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. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. For this reason, we're glad to see Signature Bank's earnings per share have risen 18% per annum over the last five years.
Unfortunately Signature Bank has only been paying a dividend for a year or so, so there's not much of a history to draw insight from.
Final Takeaway
Is Signature Bank an attractive dividend stock, or better left on the shelf? Typically, companies that are growing rapidly and paying out a low fraction of earnings are keeping the profits for reinvestment in the business. Perhaps even more importantly - this can sometimes signal management is focused on the long term future of the business. We think this is a pretty attractive combination, and would be interested in investigating Signature Bank more closely.
Ever wonder what the future holds for Signature Bank? See what the 16 analysts we track are forecasting, with this visualisation of its historical and future estimated earnings and cash flow
If you're in the market for dividend stocks, we recommend checking our list of top dividend stocks with a greater than 2% yield and an upcoming dividend.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
