It looks like Heritage Commerce Corp (NASDAQ:HTBK) is about to go ex-dividend in the next 3 days. You will need to purchase shares before the 4th of February to receive the dividend, which will be paid on the 19th of February.
Heritage Commerce’s next dividend payment will be US$0.13 per share, and in the last 12 months, the company paid a total of US$0.52 per share. Based on the last year’s worth of payments, Heritage Commerce stock has a trailing yield of around 4.3% on the current share price of $11.99. 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 investigate whether Heritage Commerce can afford its dividend, and if the dividend could grow.
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. Heritage Commerce paid out 55% of its earnings to investors last year, a normal payout level for most businesses.
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.
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 decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. For this reason, we’re glad to see Heritage Commerce’s earnings per share have risen 16% 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. Heritage Commerce has delivered 28% dividend growth per year on average over the past six years. Both per-share earnings and dividends have both been growing rapidly in recent times, which is great to see.
From a dividend perspective, should investors buy or avoid Heritage Commerce? Earnings per share are growing nicely, and Heritage Commerce is paying out a percentage of its earnings that is around the average for dividend-paying stocks. We think this is a pretty attractive combination, and would be interested in investigating Heritage Commerce more closely.
Ever wonder what the future holds for Heritage Commerce? See what the five analysts we track are forecasting, with this visualisation of its historical and future estimated earnings and cash flow
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.
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