MVB Financial Corp. (NASDAQ:MVBF) Looks Like A Good Stock, And It's Going Ex-Dividend Soon

By
Simply Wall St
Published
February 23, 2022
NasdaqCM:MVBF
Source: Shutterstock

MVB Financial Corp. (NASDAQ:MVBF) 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 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. This means that investors who purchase MVB Financial's shares on or after the 28th of February will not receive the dividend, which will be paid on the 15th of March.

The company's next dividend payment will be US$0.17 per share, and in the last 12 months, the company paid a total of US$0.60 per share. Last year's total dividend payments show that MVB Financial has a trailing yield of 1.7% on the current share price of $39.07. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. We need to see whether the dividend is covered by earnings and if it's growing.

Check out our latest analysis for MVB Financial

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. MVB Financial has a low and conservative payout ratio of just 15% of its income after tax.

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.

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NasdaqCM:MVBF Historic Dividend February 23rd 2022

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. That's why it's comforting to see MVB Financial's earnings have been skyrocketing, up 28% 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. In the past 10 years, MVB Financial has increased its dividend at approximately 31% 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.

Final Takeaway

Should investors buy MVB Financial for the upcoming dividend? Companies like MVB Financial 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. MVB Financial 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.

In light of that, while MVB Financial has an appealing dividend, it's worth knowing the risks involved with this stock. Our analysis shows 2 warning signs for MVB Financial that we strongly recommend you have a look at before investing in the company.

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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