Should You Buy Associated Banc-Corp (NYSE:ASB) For Its Upcoming Dividend?

It looks like Associated Banc-Corp (NYSE:ASB) is about to go ex-dividend in the next four days. You will need to purchase shares before the 31st of August to receive the dividend, which will be paid on the 15th of September.

Associated Banc-Corp’s next dividend payment will be US$0.18 per share. Last year, in total, the company distributed US$0.72 to shareholders. Last year’s total dividend payments show that Associated Banc-Corp has a trailing yield of 5.1% on the current share price of $14.04. We love seeing companies pay a dividend, but it’s also important to be sure that laying the golden eggs isn’t going to kill our golden goose! We need to see whether the dividend is covered by earnings and if it’s growing.

View our latest analysis for Associated Banc-Corp

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. Fortunately Associated Banc-Corp’s payout ratio is modest, at just 33% 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.

Click here to see the company’s payout ratio, plus analyst estimates of its future dividends.

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NYSE:ASB Historic Dividend August 26th 2020

Have Earnings And Dividends Been Growing?

Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. Fortunately for readers, Associated Banc-Corp’s earnings per share have been growing at 13% a year for the past five years.

Many investors will assess a company’s dividend performance by evaluating how much the dividend payments have changed over time. In the past 10 years, Associated Banc-Corp has increased its dividend at approximately 14% a year on average. It’s exciting to see that both earnings and dividends per share have grown rapidly over the past few years.

To Sum It Up

Should investors buy Associated Banc-Corp for the upcoming dividend? Companies like Associated Banc-Corp 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. Overall, Associated Banc-Corp looks like a promising dividend stock in this analysis, and we think it would be worth investigating further.

On that note, you’ll want to research what risks Associated Banc-Corp is facing. To help with this, we’ve discovered 2 warning signs for Associated Banc-Corp (1 is concerning!) that you ought to be aware of before buying the shares.

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.

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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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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