Southside Bancshares, Inc. (NASDAQ:SBSI) stock is about to trade ex-dividend in 4 days time. If you purchase the stock on or after the 20th of May, you won’t be eligible to receive this dividend, when it is paid on the 4th of June.
Southside Bancshares’s upcoming dividend is US$0.31 a share, following on from the last 12 months, when the company distributed a total of US$1.27 per share to shareholders. Looking at the last 12 months of distributions, Southside Bancshares has a trailing yield of approximately 4.9% on its current stock price of $26. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. That’s why we should always check whether the dividend payments appear sustainable, and if the company is growing.
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. Southside Bancshares is paying out an acceptable 70% of its profit, a common payout level among most companies.
Generally speaking, the lower a company’s payout ratios, the more resilient its dividend usually is.
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 earnings fall far enough, the company could be forced to cut its dividend. For this reason, we’re glad to see Southside Bancshares’s earnings per share have risen 13% 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. In the last ten years, Southside Bancshares has lifted its dividend by approximately 11% a year on average. It’s great to see earnings per share growing rapidly over several years, and dividends per share growing right along with it.
To Sum It Up
Is Southside Bancshares an attractive dividend stock, or better left on the shelf? Earnings per share are growing at an attractive rate, and Southside Bancshares is paying out a bit over half its profits. Southside Bancshares 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.
So while Southside Bancshares looks good from a dividend perspective, it’s always worthwhile being up to date with the risks involved in this stock. To help with this, we’ve discovered 2 warning signs for Southside Bancshares that you should be aware of before investing in their shares.
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.
If you spot an error that warrants correction, please contact the editor at email@example.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.
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