Southern National Bancorp of Virginia, Inc. (NASDAQ:SONA) stock is about to trade ex-dividend in 4 days time. Ex-dividend means that investors that purchase the stock on or after the 13th of February will not receive this dividend, which will be paid on the 28th of February.
Southern National Bancorp of Virginia’s next dividend payment will be US$0.10 per share, on the back of last year when the company paid a total of US$0.40 to shareholders. Based on the last year’s worth of payments, Southern National Bancorp of Virginia has a trailing yield of 2.5% on the current stock price of $15.91. If you buy this business for its dividend, you should have an idea of whether Southern National Bancorp of Virginia’s dividend is reliable and sustainable. So we need to check whether the dividend payments are covered, and if earnings are growing.
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. That’s why it’s good to see Southern National Bancorp of Virginia paying out a modest 27% of its earnings.
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.
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. If earnings fall far enough, the company could be forced to cut its dividend. For this reason, we’re glad to see Southern National Bancorp of Virginia’s earnings per share have risen 17% per annum over the last five years.
Many investors will assess a company’s dividend performance by evaluating how much the dividend payments have changed over time. In the last eight years, Southern National Bancorp of Virginia has lifted its dividend by approximately 27% 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.
Has Southern National Bancorp of Virginia got what it takes to maintain its dividend payments? Typically, companies that are growing rapidly and paying out a low fraction of earnings are keeping the profits for reinvestment in the business. This is one of the most attractive investment combinations under this analysis, as it can create substantial value for investors over the long run. Southern National Bancorp of Virginia 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.
Want to learn more about Southern National Bancorp of Virginia’s dividend performance? Check out this visualisation 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.
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