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

By
Simply Wall St
Published
July 24, 2021
NasdaqGS:HOPE
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Hope Bancorp, Inc. (NASDAQ:HOPE) is about to trade ex-dividend in the next four 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 an important date to be aware of as any purchase of the stock made on or after this date might mean a late settlement that doesn't show on the record date. In other words, investors can purchase Hope Bancorp's shares before the 29th of July in order to be eligible for the dividend, which will be paid on the 13th of August.

The company's next dividend payment will be US$0.14 per share, and in the last 12 months, the company paid a total of US$0.56 per share. Based on the last year's worth of payments, Hope Bancorp has a trailing yield of 4.3% on the current stock price of $13.08. 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.

Check out our latest analysis for Hope Bancorp

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. Hope Bancorp paid out a comfortable 44% of its profit last year.

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:HOPE Historic Dividend July 24th 2021

Have Earnings And Dividends Been Growing?

Companies that aren't growing their earnings can still be valuable, but it is even more important to assess the sustainability of the dividend if it looks like the company will struggle to grow. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. That explains why we're not overly excited about Hope Bancorp's flat earnings over the past five years. We'd take that over an earnings decline any day, but in the long run, the best dividend stocks all grow their earnings per share.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. In the past nine years, Hope Bancorp has increased its dividend at approximately 12% a year on average.

To Sum It Up

Is Hope Bancorp worth buying for its dividend? Earnings per share have been flat in recent years, although Hope Bancorp reinvests more than half its earnings in the business, which could suggest there are some growth projects that have not yet reached fruition. In summary, Hope Bancorp appears to have some promise as a dividend stock, and we'd suggest taking a closer look at it.

In light of that, while Hope Bancorp has an appealing dividend, it's worth knowing the risks involved with this stock. We've identified 2 warning signs with Hope Bancorp (at least 1 which makes us a bit uncomfortable), and understanding these should be part of your investment process.

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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