Eagle Bancorp Montana, Inc. (NASDAQ:EBMT) Looks Like A Good Stock, And It's Going Ex-Dividend Soon
Readers hoping to buy Eagle Bancorp Montana, Inc. (NASDAQ:EBMT) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. 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 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. Thus, you can purchase Eagle Bancorp Montana's shares before the 11th of August in order to receive the dividend, which the company will pay on the 2nd of September.
The company's next dividend payment will be US$0.14 per share. Last year, in total, the company distributed US$0.55 to shareholders. Calculating the last year's worth of payments shows that Eagle Bancorp Montana has a trailing yield of 2.8% on the current share price of $19.35. 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.
See our latest analysis for Eagle Bancorp Montana
Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. That's why it's good to see Eagle Bancorp Montana paying out a modest 33% of its earnings.
Companies that pay out less in dividends than they earn in profits generally have more sustainable dividends. The lower the payout ratio, the more wiggle room the business has before it could be forced to cut the dividend.
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. This is why it's a relief to see Eagle Bancorp Montana earnings per share are up 3.6% per annum over the last five years.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Eagle Bancorp Montana has delivered an average of 6.8% per year annual increase in its dividend, based on the past 10 years of dividend payments. It's encouraging to see the company lifting dividends while earnings are growing, suggesting at least some corporate interest in rewarding shareholders.
To Sum It Up
From a dividend perspective, should investors buy or avoid Eagle Bancorp Montana? It has been growing its earnings per share somewhat in recent years, although it reinvests more than half its earnings in the business, which could suggest there are some growth projects that have not yet reached fruition. Overall, Eagle Bancorp Montana looks like a promising dividend stock in this analysis, and we think it would be worth investigating further.
While it's tempting to invest in Eagle Bancorp Montana for the dividends alone, you should always be mindful of the risks involved. Every company has risks, and we've spotted 2 warning signs for Eagle Bancorp Montana you should know about.
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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