Regular readers will know that we love our dividends at Simply Wall St, which is why it’s exciting to see Southside Bancshares, Inc. (NASDAQ:SBSI) is about to trade ex-dividend in the next 4 days. You will need to purchase shares before the 21st of August to receive the dividend, which will be paid on the 5th of September.
Southside Bancshares’s next dividend payment will be US$0.31 per share, and in the last 12 months, the company paid a total of US$1.26 per share. Based on the last year’s worth of payments, Southside Bancshares stock has a trailing yield of around 3.9% on the current share price of $32.31. If you buy this business for its dividend, you should have an idea of whether Southside Bancshares’s dividend is reliable and sustainable. So we need to investigate whether Southside Bancshares can afford its dividend, and if the dividend could grow.
See our latest analysis for Southside Bancshares
Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. Southside Bancshares paid out 55% of its earnings to investors last year, a normal payout level for most businesses.
Generally speaking, the lower a company’s payout ratios, the more resilient its dividend usually is.
Click here to see the company’s payout ratio, plus analyst estimates of its future dividends.
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. With that in mind, we’re encouraged by the steady growth at Southside Bancshares, with earnings per share up 2.4% on average 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. In the last 10 years, Southside Bancshares has lifted its dividend by approximately 12% 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
Is Southside Bancshares an attractive dividend stock, or better left on the shelf? Southside Bancshares has been generating some growth in earnings per share while paying out more than half of its earnings to shareholders in the form of dividends. At best we would put it on a watch-list to see if business conditions improve, as it doesn’t look like a clear opportunity right now.
Curious what other investors think of Southside Bancshares? See what analysts are forecasting, with this visualisation of its historical and future estimated earnings and cash flow .
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.
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.