Don't Race Out To Buy Northfield Bancorp, Inc. (Staten Island, NY) (NASDAQ:NFBK) Just Because It's Going Ex-Dividend

It looks like Northfield Bancorp, Inc. (Staten Island, NY) (NASDAQ:NFBK) is about to go ex-dividend in the next 3 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 Northfield Bancorp (Staten Island NY)'s shares before the 7th of May in order to be eligible for the dividend, which will be paid on the 22nd of May.

The company's upcoming dividend is US$0.13 a share, following on from the last 12 months, when the company distributed a total of US$0.52 per share to shareholders. Last year's total dividend payments show that Northfield Bancorp (Staten Island NY) has a trailing yield of 5.9% on the current share price of US$8.87. 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 Northfield Bancorp (Staten Island NY)

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. Northfield Bancorp (Staten Island NY) paid out more than half (69%) of its earnings last year, which is a regular payout ratio for most companies.

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?

Companies with falling earnings are riskier for dividend shareholders. 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 not ideal to see Northfield Bancorp (Staten Island NY)'s earnings per share have been shrinking at 3.5% a year over the previous five years.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Northfield Bancorp (Staten Island NY) has delivered 8.0% dividend growth per year on average over the past 10 years. That's interesting, but the combination of a growing dividend despite declining earnings can typically only be achieved by paying out more of the company's profits. This can be valuable for shareholders, but it can't go on forever.

The Bottom Line

From a dividend perspective, should investors buy or avoid Northfield Bancorp (Staten Island NY)? Earnings per share have been declining and the company is paying out more than half its profits to shareholders; not an enticing combination. Northfield Bancorp (Staten Island NY) doesn't appear to have a lot going for it, and we're not inclined to take a risk on owning it for the dividend.

Although, if you're still interested in Northfield Bancorp (Staten Island NY) and want to know more, you'll find it very useful to know what risks this stock faces. For example - Northfield Bancorp (Staten Island NY) has 1 warning sign we think you should be aware of.

A common investing mistake is buying the first interesting stock you see. Here you can find a full list of high-yield dividend stocks.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.