Is It Smart To Buy Auburn National Bancorporation, Inc. (NASDAQ:AUBN) Before It Goes Ex-Dividend?

It looks like Auburn National Bancorporation, Inc. (NASDAQ:AUBN) is about to go ex-dividend in the next 4 days. You will need to purchase shares before the 9th of December to receive the dividend, which will be paid on the 28th of December.

Auburn National Bancorporation's upcoming dividend is US$0.26 a share, following on from the last 12 months, when the company distributed a total of US$1.02 per share to shareholders. Last year's total dividend payments show that Auburn National Bancorporation has a trailing yield of 2.4% on the current share price of $42.96. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. We need to see whether the dividend is covered by earnings and if it's growing.

See our latest analysis for Auburn National Bancorporation

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. Fortunately Auburn National Bancorporation's payout ratio is modest, at just 45% of profit.

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

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

Have Earnings And Dividends Been Growing?

Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. This is why it's a relief to see Auburn National Bancorporation earnings per share are up 2.1% per annum over the last five years.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Auburn National Bancorporation has delivered 2.7% dividend growth per year on average over the past 10 years. It's encouraging to see the company lifting dividends while earnings are growing, suggesting at least some corporate interest in rewarding shareholders.

Final Takeaway

Should investors buy Auburn National Bancorporation for the upcoming dividend? It has been growing its earnings per share somewhat in recent years, although it reinvests more than half its earnings in the business, which could suggest there are some growth projects that have not yet reached fruition. We think this is a pretty attractive combination, and would be interested in investigating Auburn National Bancorporation more closely.

While it's tempting to invest in Auburn National Bancorporation for the dividends alone, you should always be mindful of the risks involved. Every company has risks, and we've spotted 1 warning sign for Auburn National Bancorporation you should know about.

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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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. 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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