We Wouldn't Be Too Quick To Buy AmeriServ Financial, Inc. (NASDAQ:ASRV) Before It Goes Ex-Dividend

AmeriServ Financial, Inc. (NASDAQ:ASRV) is about to trade ex-dividend in the next three days. The ex-dividend date occurs one day before the record date which is the day on which shareholders need to be on the company's books in order to receive a dividend. The ex-dividend date is important as the process of settlement involves two full business days. So if you miss that date, you would not show up on the company's books on the record date. Accordingly, AmeriServ Financial investors that purchase the stock on or after the 5th of August will not receive the dividend, which will be paid on the 19th of August.

The company's next dividend payment will be US$0.03 per share, on the back of last year when the company paid a total of US$0.12 to shareholders. Based on the last year's worth of payments, AmeriServ Financial has a trailing yield of 4.8% on the current stock price of US$2.51. If you buy this business for its dividend, you should have an idea of whether AmeriServ Financial's dividend is reliable and sustainable. So we need to check whether the dividend payments are covered, and if earnings are growing.

View our latest analysis for AmeriServ Financial

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. AmeriServ Financial lost money last year, so the fact that it's paying a dividend is certainly disconcerting. There might be a good reason for this, but we'd want to look into it further before getting comfortable.

Click here to see how much of its profit AmeriServ Financial paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Businesses with shrinking earnings are tricky from a dividend perspective. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. AmeriServ Financial reported a loss last year, and the general trend suggests its earnings have also been declining in recent years, making us wonder if the dividend is at risk.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. AmeriServ Financial has delivered an average of 12% per year annual increase in its dividend, based on the past 10 years of dividend payments.

We update our analysis on AmeriServ Financial every 24 hours, so you can always get the latest insights on its financial health, here.

Final Takeaway

Is AmeriServ Financial worth buying for its dividend? First, it's not great to see the company paying a dividend despite being loss-making over the last year. Worse, the general trend in its earnings looks negative in recent years. These characteristics don't generally lead to outstanding dividend performance, and investors may not be happy with the results of owning this stock for its dividend.

With that in mind though, if the poor dividend characteristics of AmeriServ Financial don't faze you, it's worth being mindful of the risks involved with this business. We've identified 3 warning signs with AmeriServ Financial (at least 1 which is significant), and understanding them should be part of your investment process.

A common investing mistake is buying the first interesting stock you see. Here you can find a full list of high-yield dividend stocks.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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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