Signature Bank (NASDAQ:SBNY) Passed Our Checks, And It's About To Pay A US$0.56 Dividend
Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Signature Bank (NASDAQ:SBNY) is about to trade ex-dividend in the next 4 days. You can purchase shares before the 29th of January in order to receive the dividend, which the company will pay on the 12th of February.
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 stock has a trailing yield of around 1.4% on the current share price of $160.27. 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 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 has a low and conservative payout ratio of just 22% of its income after tax.
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?
Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If earnings fall far enough, the company could be forced to cut its dividend. This is why it's a relief to see Signature Bank earnings per share are up 6.4% 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. Signature Bank's dividend payments are broadly unchanged compared to where they were three years ago.
To Sum It Up
Is Signature Bank an attractive dividend stock, or better left on the shelf? Signature Bank has seen its earnings per share grow slowly in recent years, and the company reinvests more than half of its profits in the business, which generally bodes well for its future prospects. Signature Bank ticks a lot of boxes for us from a dividend perspective, and we think these characteristics should mark the company as deserving of further attention.
In light of that, while Signature Bank has an appealing dividend, it's worth knowing the risks involved with this stock. Case in point: We've spotted 2 warning signs for Signature Bank you should be aware of.
A common investment mistake is buying the first interesting stock you see. Here you can find a list of promising 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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