Atlantic Union Bankshares Corporation (NASDAQ:AUB) stock is about to trade ex-dividend in 4 days time. You can purchase shares before the 1st of August in order to receive the dividend, which the company will pay on the 16th of August.
Atlantic Union Bankshares’s next dividend payment will be US$0.25 per share, and in the last 12 months, the company paid a total of US$1.00 per share. Calculating the last year’s worth of payments shows that Atlantic Union Bankshares has a trailing yield of 2.6% on the current share price of $38.12. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. So we need to investigate whether Atlantic Union Bankshares can afford its dividend, and if the dividend could grow.
If a company pays out more in dividends than it earned, then the dividend might become unsustainable – hardly an ideal situation. Fortunately Atlantic Union Bankshares’s payout ratio is modest, at just 40% of profit.
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?
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 Atlantic Union Bankshares’s earnings per share have risen 11% per annum over the last five years.
The main way most investors will assess a company’s dividend prospects is by checking the historical rate of dividend growth. Atlantic Union Bankshares has delivered 3.1% dividend growth per year on average over the past 10 years. Earnings per share have been growing much quicker than dividends, potentially because Atlantic Union Bankshares is keeping back more of its profits to grow the business.
From a dividend perspective, should investors buy or avoid Atlantic Union Bankshares? Typically, companies that are growing rapidly and paying out a low fraction of earnings are keeping the profits for reinvestment in the business. Perhaps even more importantly – this can sometimes signal management is focused on the long term future of the business. We think this is a pretty attractive combination, and would be interested in investigating Atlantic Union Bankshares more closely.
Ever wonder what the future holds for Atlantic Union Bankshares? See what the six analysts we track are forecasting, with this visualisation of its historical and future estimated earnings and cash flow
We wouldn’t recommend just buying the first dividend stock you see, though. Here’s a list of interesting 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 email@example.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. Thank you for reading.