Regular readers will know that we love our dividends at Simply Wall St, which is why it’s exciting to see Brookline Bancorp, Inc. (NASDAQ:BRKL) is about to trade ex-dividend in the next 3 days. Investors can purchase shares before the 13th of February in order to be eligible for this dividend, which will be paid on the 28th of February.
Brookline Bancorp’s upcoming dividend is US$0.12 a share, following on from the last 12 months, when the company distributed a total of US$0.46 per share to shareholders. Based on the last year’s worth of payments, Brookline Bancorp stock has a trailing yield of around 2.9% on the current share price of $15.59. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. As a result, readers should always check whether Brookline Bancorp has been able to grow its dividends, or if the dividend might be cut.
If a company pays out more in dividends than it earned, then the dividend might become unsustainable – hardly an ideal situation. Fortunately Brookline Bancorp’s payout ratio is modest, at just 41% 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 earnings fall far enough, the company could be forced to cut its dividend. Fortunately for readers, Brookline Bancorp’s earnings per share have been growing at 12% a year for the past five years.
Another key way to measure a company’s dividend prospects is by measuring its historical rate of dividend growth. Brookline Bancorp’s dividend payments per share have declined at 1.6% per year on average over the past ten years, which is uninspiring.
Has Brookline Bancorp got what it takes to maintain its dividend payments? Companies like Brookline Bancorp that are growing rapidly and paying out a low fraction of earnings, are usually reinvesting heavily in their business. Perhaps even more importantly – this can sometimes signal management is focused on the long term future of the business. Overall, Brookline Bancorp looks like a promising dividend stock in this analysis, and we think it would be worth investigating further.
Ever wonder what the future holds for Brookline Bancorp? See what the four analysts we track are forecasting, with this visualisation of its historical and future estimated earnings and cash flow
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 firstname.lastname@example.org. 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.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.