National Bankshares, Inc. (NASDAQ:NKSH) Will Pay A US$0.70 Dividend In Four Days
National Bankshares, Inc. (NASDAQ:NKSH) is about to trade 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 of consequence because whenever a stock is bought or sold, the trade takes at least two business day to settle. Accordingly, National Bankshares investors that purchase the stock on or after the 21st of May will not receive the dividend, which will be paid on the 1st of June.
The company's upcoming dividend is US$0.70 a share, following on from the last 12 months, when the company distributed a total of US$1.39 per share to shareholders. Calculating the last year's worth of payments shows that National Bankshares has a trailing yield of 3.9% on the current share price of $36.07. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. As a result, readers should always check whether National Bankshares has been able to grow its dividends, or if the dividend might be cut.
View our latest analysis for National Bankshares
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. National Bankshares is paying out an acceptable 53% of its profit, a common payout level among most companies.
Generally speaking, the lower a company's payout ratios, the more resilient its dividend usually is.
Click here to see how much of its profit National Bankshares paid out over the last 12 months.
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. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. This is why it's a relief to see National Bankshares earnings per share are up 2.8% per annum over the last five years.
The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. National Bankshares has delivered 4.7% dividend growth per year on average over the past 10 years. It's encouraging to see the company lifting dividends while earnings are growing, suggesting at least some corporate interest in rewarding shareholders.
Final Takeaway
From a dividend perspective, should investors buy or avoid National Bankshares? National Bankshares has been generating some growth in earnings per share while paying out more than half of its earnings to shareholders in the form of dividends. In sum this is a middling combination, and we find it hard to get excited about the company from a dividend perspective.
However if you're still interested in National Bankshares as a potential investment, you should definitely consider some of the risks involved with National Bankshares. For example - National Bankshares has 1 warning sign we think you should be aware of.
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.
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. 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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