Regular readers will know that we love our dividends at Simply Wall St, which is why it’s exciting to see Emclaire Financial Corp (NASDAQ:EMCF) is about to trade ex-dividend in the next 4 days. This means that investors who purchase shares on or after the 28th of February will not receive the dividend, which will be paid on the 20th of March.
Emclaire Financial’s upcoming dividend is US$0.30 a share, following on from the last 12 months, when the company distributed a total of US$1.16 per share to shareholders. Based on the last year’s worth of payments, Emclaire Financial stock has a trailing yield of around 3.7% on the current share price of $32.8397. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. So we need to check whether the dividend payments are covered, and if earnings are growing.
View our latest analysis for Emclaire Financial
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. That’s why it’s good to see Emclaire Financial paying out a modest 40% of its earnings.
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 Emclaire Financial paid out over the last 12 months.
Have Earnings And Dividends Been Growing?
Businesses with strong growth prospects usually make the best dividend payers, because it’s easier to grow dividends when earnings per share are improving. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. With that in mind, we’re encouraged by the steady growth at Emclaire Financial, with earnings per share up 5.4% on average over the last five years.
Another key way to measure a company’s dividend prospects is by measuring its historical rate of dividend growth. In the past ten years, Emclaire Financial has increased its dividend at approximately 7.9% a year on average. We’re glad to see dividends rising alongside earnings over a number of years, which may be a sign the company intends to share the growth with shareholders.
To Sum It Up
Should investors buy Emclaire Financial for the upcoming dividend? Emclaire Financial 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. Overall, Emclaire Financial looks like a promising dividend stock in this analysis, and we think it would be worth investigating further.
Want to learn more about Emclaire Financial? Here’s a visualisation of its historical rate of revenue and earnings growth.
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.
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.
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. Thank you for reading.