Only Four Days Left To Cash In On Ames National's (NASDAQ:ATLO) Dividend

Readers hoping to buy Ames National Corporation (NASDAQ:ATLO) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. The ex-dividend date is one business day before a company's record date, which is the date on which the company determines which shareholders are entitled to receive a dividend. The ex-dividend date is of consequence because whenever a stock is bought or sold, the trade takes at least one business day to settle. In other words, investors can purchase Ames National's shares before the 1st of December in order to be eligible for the dividend, which will be paid on the 15th of December.

The company's upcoming dividend is US$0.20 a share, following on from the last 12 months, when the company distributed a total of US$0.80 per share to shareholders. Based on the last year's worth of payments, Ames National stock has a trailing yield of around 3.7% on the current share price of US$21.75. If you buy this business for its dividend, you should have an idea of whether Ames National's dividend is reliable and sustainable. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

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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. That's why it's good to see Ames National paying out a modest 33% of its earnings.

Generally speaking, the lower a company's payout ratios, the more resilient its dividend usually is.

View our latest analysis for Ames National

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

Have Earnings And Dividends Been Growing?

Companies that aren't growing their earnings can still be valuable, but it is even more important to assess the sustainability of the dividend if it looks like the company will struggle to grow. If earnings fall far enough, the company could be forced to cut its dividend. With that in mind, we're not enthused to see that Ames National's earnings per share have remained effectively flat over the past five years. It's better than seeing them drop, certainly, but over the long term, all of the best dividend stocks are able to meaningfully grow their earnings per share.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Ames National's dividend payments are effectively flat on where they were 10 years ago.

Final Takeaway

Has Ames National got what it takes to maintain its dividend payments? Ames National's earnings per share have not grown at all in recent years, although we like that it is paying out a low percentage of its earnings. We think there are likely better opportunities out there.

If you want to look further into Ames National, it's worth knowing the risks this business faces. For instance, we've identified 2 warning signs for Ames National (1 is significant) you should be aware of.

Generally, we wouldn't recommend just buying the first dividend stock you see. Here's a curated list of interesting stocks that are strong dividend payers.

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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.