Don't Buy CB Financial Services, Inc. (NASDAQ:CBFV) For Its Next Dividend Without Doing These Checks

By
Simply Wall St
Published
February 07, 2021
NasdaqGM:CBFV

Some investors rely on dividends for growing their wealth, and if you're one of those dividend sleuths, you might be intrigued to know that CB Financial Services, Inc. (NASDAQ:CBFV) is about to go ex-dividend in just four days. Investors can purchase shares before the 12th of February in order to be eligible for this dividend, which will be paid on the 26th of February.

CB Financial Services's upcoming dividend is US$0.24 a share, following on from the last 12 months, when the company distributed a total of US$0.96 per share to shareholders. Looking at the last 12 months of distributions, CB Financial Services has a trailing yield of approximately 5.2% on its current stock price of $18.35. 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 check whether the dividend payments are covered, and if earnings are growing.

View our latest analysis for CB Financial Services

Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. CB Financial Services's dividend is not well covered by earnings, as the company lost money last year. This is not a sustainable state of affairs, so it would be worth investigating if earnings are expected to recover.

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

historic-dividend
NasdaqGM:CBFV Historic Dividend February 7th 2021

Have Earnings And Dividends Been Growing?

Businesses with shrinking earnings are tricky from a dividend perspective. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. CB Financial Services 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.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. CB Financial Services has delivered an average of 1.9% per year annual increase in its dividend, based on the past seven years of dividend payments.

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

Final Takeaway

Has CB Financial Services got what it takes to maintain its dividend payments? It's definitely not great to see that it paid a dividend despite reporting a loss last year. Worse, the general trend in its earnings looks negative in recent times. This is not an overtly appealing combination of characteristics, and we're just not that interested in this company's dividend.

Having said that, if you're looking at this stock without much concern for the dividend, you should still be familiar of the risks involved with CB Financial Services. To help with this, we've discovered 3 warning signs for CB Financial Services that you should be aware of before investing in their shares.

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.

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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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