Pathfinder Bancorp, Inc. (NASDAQ:PBHC) Looks Interesting, And It's About To Pay A Dividend

By
Simply Wall St
Published
January 09, 2022
NasdaqCM:PBHC
Source: Shutterstock

Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Pathfinder Bancorp, Inc. (NASDAQ:PBHC) is about to trade ex-dividend in the next three 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 of consequence because whenever a stock is bought or sold, the trade takes at least two business day to settle. In other words, investors can purchase Pathfinder Bancorp's shares before the 13th of January in order to be eligible for the dividend, which will be paid on the 4th of February.

The company's upcoming dividend is US$0.07 a share, following on from the last 12 months, when the company distributed a total of US$0.28 per share to shareholders. Last year's total dividend payments show that Pathfinder Bancorp has a trailing yield of 1.6% on the current share price of $17.05. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. As a result, readers should always check whether Pathfinder Bancorp has been able to grow its dividends, or if the dividend might be cut.

See our latest analysis for Pathfinder Bancorp

Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. Pathfinder Bancorp is paying out just 17% of its profit after tax, which is comfortably low and leaves plenty of breathing room in the case of adverse events.

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 Pathfinder Bancorp paid out over the last 12 months.

historic-dividend
NasdaqCM:PBHC Historic Dividend January 9th 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. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. For this reason, we're glad to see Pathfinder Bancorp's earnings per share have risen 15% 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. Pathfinder Bancorp has delivered 14% dividend growth per year on average over the past 10 years. It's great to see earnings per share growing rapidly over several years, and dividends per share growing right along with it.

To Sum It Up

Should investors buy Pathfinder Bancorp for the upcoming dividend? Companies like Pathfinder Bancorp that are growing rapidly and paying out a low fraction of earnings, are usually reinvesting heavily in their business. This strategy can add significant value to shareholders over the long term - as long as it's done without issuing too many new shares. In summary, Pathfinder Bancorp appears to have some promise as a dividend stock, and we'd suggest taking a closer look at it.

So while Pathfinder Bancorp looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. Our analysis shows 1 warning sign for Pathfinder Bancorp and you should be aware of it before buying any shares.

A common investment mistake is buying the first interesting stock you see. Here you can find a list of promising dividend stocks with a greater than 2% yield and an upcoming dividend.

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