Mid-Southern Bancorp, Inc. (NASDAQ:MSVB) Looks Interesting, And It's About To Pay A Dividend

Mid-Southern Bancorp, Inc. (NASDAQ:MSVB) is about to trade ex-dividend in the next 4 days. If you purchase the stock on or after the 18th of February, you won't be eligible to receive this dividend, when it is paid on the 1st of March.

Mid-Southern Bancorp's next dividend payment will be US$0.03 per share, and in the last 12 months, the company paid a total of US$0.08 per share. Based on the last year's worth of payments, Mid-Southern Bancorp has a trailing yield of 0.8% on the current stock price of $15.95. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. As a result, readers should always check whether Mid-Southern Bancorp has been able to grow its dividends, or if the dividend might be cut.

View our latest analysis for Mid-Southern Bancorp

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. Mid-Southern Bancorp has a low and conservative payout ratio of just 22% of its income after tax.

Generally speaking, the lower a company's payout ratios, the more resilient its dividend usually is.

Click here to see how much of its profit Mid-Southern Bancorp paid out over the last 12 months.

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. That's why it's comforting to see Mid-Southern Bancorp's earnings have been skyrocketing, up 57% per annum for the past five years.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Mid-Southern Bancorp's dividend payments per share have declined at 8.5% per year on average over the past seven years, which is uninspiring. Mid-Southern Bancorp is a rare case where dividends have been decreasing at the same time as earnings per share have been improving. It's unusual to see, and could point to unstable conditions in the core business, or more rarely an intensified focus on reinvesting profits.

The Bottom Line

Has Mid-Southern Bancorp got what it takes to maintain its dividend payments? Typically, companies that are growing rapidly and paying out a low fraction of earnings are keeping the profits for reinvestment in the business. Perhaps even more importantly - this can sometimes signal management is focused on the long term future of the business. Mid-Southern Bancorp 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.

While it's tempting to invest in Mid-Southern Bancorp for the dividends alone, you should always be mindful of the risks involved. Our analysis shows 3 warning signs for Mid-Southern Bancorp that we strongly recommend you have a look at before investing in the company.

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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