Regular readers will know that we love our dividends at Simply Wall St, which is why it’s exciting to see Community West Bancshares (NASDAQ:CWBC) is about to trade ex-dividend in the next 3 days. Investors can purchase shares before the 12th of August in order to be eligible for this dividend, which will be paid on the 30th of August.
Community West Bancshares’s next dividend payment will be US$0.055 per share, and in the last 12 months, the company paid a total of US$0.22 per share. Based on the last year’s worth of payments, Community West Bancshares stock has a trailing yield of around 2.2% on the current share price of $9.92. If you buy this business for its dividend, you should have an idea of whether Community West Bancshares’s dividend is reliable and sustainable. As a result, readers should always check whether Community West Bancshares has been able to grow its dividends, or if the dividend might be cut.
See our latest analysis for Community West Bancshares
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. Community West Bancshares paid out a comfortable 25% of its profit last year.
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 how much of its profit Community West Bancshares paid out over the last 12 months.
Have Earnings And Dividends Been Growing?
Businesses with shrinking earnings are tricky from a dividend perspective. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. Readers will understand then, why we’re concerned to see Community West Bancshares’s earnings per share have dropped 6.5% a year over the past five years. Ultimately, when earnings per share decline, the size of the pie from which dividends can be paid, shrinks.
Another key way to measure a company’s dividend prospects is by measuring its historical rate of dividend growth. Since the start of our data, 5 years ago, Community West Bancshares has lifted its dividend by approximately 22% a year on average.
To Sum It Up
Is Community West Bancshares worth buying for its dividend? Community West Bancshares’s earnings per share are down over the past 5 years, although it has the cushion of a low payout ratio, which would suggest a cut to the dividend is relatively unlikely. We think there are likely better opportunities out there.
Curious about whether Community West Bancshares has been able to consistently generate growth? Here’s a chart of its historical revenue and earnings growth.
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.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.