Should You Buy Richmond Mutual Bancorporation, Inc. (NASDAQ:RMBI) For Its Upcoming Dividend?

Readers hoping to buy Richmond Mutual Bancorporation, Inc. (NASDAQ:RMBI) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. You will need to purchase shares before the 3rd of March to receive the dividend, which will be paid on the 18th of March.

Richmond Mutual Bancorporation's next dividend payment will be US$0.07 per share. Last year, in total, the company distributed US$0.20 to shareholders. Based on the last year's worth of payments, Richmond Mutual Bancorporation has a trailing yield of 2.1% on the current stock price of $13.08. 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 Richmond Mutual Bancorporation has been able to grow its dividends, or if the dividend might be cut.

Check out our latest analysis for Richmond Mutual Bancorporation

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. Richmond Mutual Bancorporation is paying out just 12% 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 Richmond Mutual Bancorporation paid out over the last 12 months.

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 fall far enough, the company could be forced to cut its dividend.

Given that Richmond Mutual Bancorporation has only been paying a dividend for a year, there's not much of a past history to draw insight from.

The Bottom Line

Has Richmond Mutual Bancorporation got what it takes to maintain its dividend payments? When companies are growing rapidly and retaining a majority of the profits within the business, it's usually a sign that reinvesting earnings creates more value than paying dividends to shareholders. This is one of the most attractive investment combinations under this analysis, as it can create substantial value for investors over the long run. Richmond Mutual Bancorporation 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.

With that in mind, a critical part of thorough stock research is being aware of any risks that stock currently faces. Case in point: We've spotted 1 warning sign for Richmond Mutual Bancorporation you should be aware of.

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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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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