MetroCity Bankshares, Inc. (NASDAQ:MCBS) Passed Our Checks, And It's About To Pay A US$0.10 Dividend

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 MetroCity Bankshares, Inc. (NASDAQ:MCBS) is about to go ex-dividend in just 4 days. You can purchase shares before the 2nd of February in order to receive the dividend, which the company will pay on the 12th of February.

MetroCity Bankshares's next dividend payment will be US$0.10 per share, and in the last 12 months, the company paid a total of US$0.40 per share. Last year's total dividend payments show that MetroCity Bankshares has a trailing yield of 2.8% on the current share price of $14.27. If you buy this business for its dividend, you should have an idea of whether MetroCity Bankshares's dividend is reliable and sustainable. As a result, readers should always check whether MetroCity Bankshares has been able to grow its dividends, or if the dividend might be cut.

View our latest analysis for MetroCity Bankshares

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 MetroCity Bankshares paying out a modest 28% 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?

Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. For this reason, we're glad to see MetroCity Bankshares's earnings per share have risen 14% per annum over the last five years.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. MetroCity Bankshares has delivered an average of 35% per year annual increase in its dividend, based on the past four years of dividend payments. 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 MetroCity Bankshares an attractive dividend stock, or better left on the shelf? Companies like MetroCity Bankshares 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. MetroCity Bankshares ticks a lot of boxes for us from a dividend perspective, and we think these characteristics should mark the company as deserving of further attention.

So while MetroCity Bankshares looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. Case in point: We've spotted 2 warning signs for MetroCity Bankshares you should be aware of.

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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