Some investors rely on dividends for growing their wealth, and if you’re one of those dividend sleuths, you might be intrigued to know that Colony Bankcorp, Inc. (NASDAQ:CBAN) is about to go ex-dividend in just 3 days. This means that investors who purchase shares on or after the 30th of January will not receive the dividend, which will be paid on the 18th of February.
Colony Bankcorp’s next dividend payment will be US$0.10 per share, and in the last 12 months, the company paid a total of US$0.40 per share. Last year’s total dividend payments show that Colony Bankcorp has a trailing yield of 2.6% on the current share price of $15.4. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. As a result, readers should always check whether Colony Bankcorp has been able to grow its dividends, or if the dividend might be cut.
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. Fortunately Colony Bankcorp’s payout ratio is modest, at just 27% of profit.
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. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. For this reason, we’re glad to see Colony Bankcorp’s earnings per share have risen 14% per annum over the last five years.
Many investors will assess a company’s dividend performance by evaluating how much the dividend payments have changed over time. It looks like the Colony Bankcorp dividends are largely the same as they were ten years ago.
Has Colony Bankcorp got what it takes to maintain its dividend payments? Companies like Colony Bankcorp that are growing rapidly and paying out a low fraction of earnings, are usually reinvesting heavily in their business. This strategy can add significant value to shareholders over the long term – as long as it’s done without issuing too many new shares. We think this is a pretty attractive combination, and would be interested in investigating Colony Bankcorp more closely.
Want to learn more about Colony Bankcorp’s dividend performance? Check out this visualisation of its historical revenue and earnings growth.
We wouldn’t recommend just buying the first dividend stock you see, though. Here’s a list of interesting dividend stocks with a greater than 2% yield and an upcoming dividend.
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