Is It Smart To Buy ConnectOne Bancorp, Inc. (NASDAQ:CNOB) Before It Goes Ex-Dividend?

By
Simply Wall St
Published
May 09, 2022
NasdaqGS:CNOB
Source: Shutterstock

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 ConnectOne Bancorp, Inc. (NASDAQ:CNOB) is about to go ex-dividend in just three days. 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 important as the process of settlement involves two full business days. So if you miss that date, you would not show up on the company's books on the record date. Thus, you can purchase ConnectOne Bancorp's shares before the 13th of May in order to receive the dividend, which the company will pay on the 1st of June.

The company's next dividend payment will be US$0.15 per share. Last year, in total, the company distributed US$0.62 to shareholders. Based on the last year's worth of payments, ConnectOne Bancorp stock has a trailing yield of around 2.2% on the current share price of $27.7. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

See our latest analysis for ConnectOne Bancorp

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. ConnectOne Bancorp is paying out just 17% of its profit after tax, which is comfortably low and leaves plenty of breathing room in the case of adverse events.

Companies that pay out less in dividends than they earn in profits generally have more sustainable dividends. The lower the payout ratio, the more wiggle room the business has before it could be forced to cut the dividend.

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

historic-dividend
NasdaqGS:CNOB Historic Dividend May 9th 2022

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 decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. That's why it's comforting to see ConnectOne Bancorp's earnings have been skyrocketing, up 26% per annum for the past five years.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. In the past 10 years, ConnectOne Bancorp has increased its dividend at approximately 18% a year on average. It's great to see earnings per share growing rapidly over several years, and dividends per share growing right along with it.

To Sum It Up

Has ConnectOne Bancorp got what it takes to maintain its dividend payments? Companies like ConnectOne Bancorp that are growing rapidly and paying out a low fraction of earnings, are usually reinvesting heavily in their business. This is one of the most attractive investment combinations under this analysis, as it can create substantial value for investors over the long run. Overall, ConnectOne 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 ConnectOne Bancorp? See what the four analysts we track are forecasting, with this visualisation of its historical and future estimated earnings and cash flow

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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