It looks like Sandy Spring Bancorp, Inc. (NASDAQ:SASR) is about to go ex-dividend in the next 3 days. You can purchase shares before the 13th of August in order to receive the dividend, which the company will pay on the 21st of August.
Sandy Spring Bancorp’s next dividend payment will be US$0.30 per share, and in the last 12 months, the company paid a total of US$1.20 per share. Last year’s total dividend payments show that Sandy Spring Bancorp has a trailing yield of 3.5% on the current share price of $34.73. 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! So we need to check whether the dividend payments are covered, and if earnings are growing.
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. Sandy Spring Bancorp paid out a comfortable 36% of its profit last year.
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 business enters a downturn and the dividend is cut, the company could see its value fall precipitously. For this reason, we’re glad to see Sandy Spring Bancorp’s earnings per share have risen 12% 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. Sandy Spring Bancorp has delivered an average of 2.3% per year annual increase in its dividend, based on the past 10 years of dividend payments. Earnings per share have been growing much quicker than dividends, potentially because Sandy Spring Bancorp is keeping back more of its profits to grow the business.
The Bottom Line
Should investors buy Sandy Spring Bancorp for the upcoming dividend? When companies are growing rapidly and retaining a majority of the profits within the business, it’s usually a sign that reinvesting earnings creates more value than paying dividends to shareholders. This strategy can add significant value to shareholders over the long term – as long as it’s done without issuing too many new shares. In summary, Sandy Spring Bancorp appears to have some promise as a dividend stock, and we’d suggest taking a closer look at it.
Wondering what the future holds for Sandy Spring Bancorp? See what the four analysts we track are forecasting, with this visualisation of its historical and future estimated earnings and cash flow
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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If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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.