Should You Buy Richmond Mutual Bancorporation, Inc. (NASDAQ:RMBI) For Its Upcoming Dividend?
Richmond Mutual Bancorporation, Inc. (NASDAQ:RMBI) stock is about to trade ex-dividend in four days. Typically, the ex-dividend date is one business day before the record date which is the date on which a company determines the shareholders eligible 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. This means that investors who purchase Richmond Mutual Bancorporation's shares on or after the 30th of November will not receive the dividend, which will be paid on the 15th of December.
The company's upcoming dividend is US$0.10 a share, following on from the last 12 months, when the company distributed a total of US$0.40 per share to shareholders. Based on the last year's worth of payments, Richmond Mutual Bancorporation has a trailing yield of 3.0% on the current stock price of $13.15. If you buy this business for its dividend, you should have an idea of whether Richmond Mutual Bancorporation's dividend is reliable and sustainable. As a result, readers should always check whether Richmond Mutual Bancorporation has been able to grow its dividends, or if the dividend might be cut.
See our latest analysis for Richmond Mutual Bancorporation
Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. Richmond Mutual Bancorporation paid out a comfortable 33% 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 how much of its profit Richmond Mutual Bancorporation paid out over the last 12 months.
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 earnings fall far enough, the company could be forced to cut its dividend. Fortunately for readers, Richmond Mutual Bancorporation's earnings per share have been growing at 20% a year for the past three years.
The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Since the start of our data, three years ago, Richmond Mutual Bancorporation has lifted its dividend by approximately 26% 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
Should investors buy Richmond Mutual Bancorporation for the upcoming dividend? Companies like Richmond Mutual Bancorporation that are growing rapidly and paying out a low fraction of earnings, are usually reinvesting heavily in their business. This is one of the most attractive investment combinations under this analysis, as it can create substantial value for investors over the long run. In summary, Richmond Mutual Bancorporation appears to have some promise as a dividend stock, and we'd suggest taking a closer look at it.
While it's tempting to invest in Richmond Mutual Bancorporation for the dividends alone, you should always be mindful of the risks involved. Our analysis shows 1 warning sign for Richmond Mutual Bancorporation and you should be aware of it before buying any shares.
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.
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