Yahoo Finance Why You Might Be Interested In Prosperity Bancshares, Inc. (NYSE:PB) For Its Upcoming Dividend
Readers hoping to buy Prosperity Bancshares, Inc. (NYSE:PB) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. You can purchase shares before the 13th of March in order to receive the dividend, which the company will pay on the 1st of April.
Prosperity Bancshares's next dividend payment will be US$0.46 per share, on the back of last year when the company paid a total of US$1.84 to shareholders. Based on the last year's worth of payments, Prosperity Bancshares stock has a trailing yield of around 2.9% on the current share price of $62.88. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! As a result, readers should always check whether Prosperity Bancshares has been able to grow its dividends, or if the dividend might be cut.
Check out our latest analysis for Prosperity Bancshares
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. Prosperity Bancshares paid out a comfortable 37% of its profit last year.
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?
Companies that aren't growing their earnings can still be valuable, but it is even more important to assess the sustainability of the dividend if it looks like the company will struggle to grow. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. That explains why we're not overly excited about Prosperity Bancshares's flat earnings over the past five years. Better than seeing them fall off a cliff, for sure, but the best dividend stocks grow their earnings meaningfully over the long run.
Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Since the start of our data, ten years ago, Prosperity Bancshares has lifted its dividend by approximately 13% a year on average.
The Bottom Line
Is Prosperity Bancshares worth buying for its dividend? Earnings per share have been flat in recent years, although Prosperity Bancshares reinvests more than half its earnings in the business, which could suggest there are some growth projects that have not yet reached fruition. In summary, Prosperity Bancshares appears to have some promise as a dividend stock, and we'd suggest taking a closer look at it.
So while Prosperity Bancshares looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. For example, we've found 1 warning sign for Prosperity Bancshares that we recommend you consider before investing in the business.
We wouldn't recommend just buying the first dividend stock you see, though. Here's a list of interesting dividend stocks with a greater than 2% yield and an upcoming dividend.
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.
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. Thank you for reading.
