Guaranty Bancshares, Inc. (NASDAQ:GNTY) Passed Our Checks, And It's About To Pay A US$0.20 Dividend

Readers hoping to buy Guaranty Bancshares, Inc. (NASDAQ:GNTY) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. Investors can purchase shares before the 26th of March in order to be eligible for this dividend, which will be paid on the 14th of April.

Guaranty Bancshares's next dividend payment will be US$0.20 per share, on the back of last year when the company paid a total of US$0.73 to shareholders. Calculating the last year's worth of payments shows that Guaranty Bancshares has a trailing yield of 2.1% on the current share price of $35.17. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! So we need to investigate whether Guaranty Bancshares can afford its dividend, and if the dividend could grow.

Check out our latest analysis for Guaranty Bancshares

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. That's why it's good to see Guaranty Bancshares paying out a modest 32% of its earnings.

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.

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. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. For this reason, we're glad to see Guaranty Bancshares's earnings per share have risen 16% 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. Guaranty Bancshares has delivered 11% dividend growth per year on average over the past four years. It's exciting to see that both earnings and dividends per share have grown rapidly over the past few years.

To Sum It Up

Is Guaranty Bancshares worth buying for its dividend? Companies like Guaranty Bancshares 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. We think this is a pretty attractive combination, and would be interested in investigating Guaranty Bancshares more closely.

In light of that, while Guaranty Bancshares has an appealing dividend, it's worth knowing the risks involved with this stock. For example - Guaranty Bancshares has 1 warning sign we think you should be aware of.

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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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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