Why You Should Leave Great Western Bancorp, Inc.’s (NYSE:GWB) Upcoming Dividend On The Shelf

Great Western Bancorp, Inc. (NYSE:GWB) stock is about to trade ex-dividend in 3 days time. If you purchase the stock on or after the 14th of May, you won’t be eligible to receive this dividend, when it is paid on the 29th of May.

Great Western Bancorp’s next dividend payment will be US$0.15 per share. Last year, in total, the company distributed US$0.60 to shareholders. Based on the last year’s worth of payments, Great Western Bancorp stock has a trailing yield of around 3.9% on the current share price of $15.29. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. As a result, readers should always check whether Great Western Bancorp has been able to grow its dividends, or if the dividend might be cut.

See our latest analysis for Great Western Bancorp

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. Great Western Bancorp’s dividend is not well covered by earnings, as the company lost money last year. This is not a sustainable state of affairs, so it would be worth investigating if earnings are expected to recover.

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

NYSE:GWB Historical Dividend Yield May 10th 2020
NYSE:GWB Historical Dividend Yield May 10th 2020

Have Earnings And Dividends Been Growing?

Companies with falling earnings are riskier for dividend shareholders. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. Great Western Bancorp was unprofitable last year and, unfortunately, the general trend suggests its earnings have been in decline over the last five years, making us wonder if the dividend is sustainable at all.

The main way most investors will assess a company’s dividend prospects is by checking the historical rate of dividend growth. In the last five years, Great Western Bancorp has lifted its dividend by approximately 4.6% a year on average.

Get our latest analysis on Great Western Bancorp’s balance sheet health here.

The Bottom Line

Should investors buy Great Western Bancorp for the upcoming dividend? It’s hard to get past the idea of Great Western Bancorp paying a dividend despite reporting a loss over the past year – especially when the general trend in its earnings also looks to be negative. This is not an overtly appealing combination of characteristics, and we’re just not that interested in this company’s dividend.

Although, if you’re still interested in Great Western Bancorp and want to know more, you’ll find it very useful to know what risks this stock faces. Case in point: We’ve spotted 2 warning signs for Great Western Bancorp you should be aware of.

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.

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.

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