Salisbury Bancorp, Inc. (NASDAQ:SAL) Looks Like A Good Stock, And It's Going Ex-Dividend Soon

Salisbury Bancorp, Inc. (NASDAQ:SAL) is about to trade ex-dividend in the next 3 days. Ex-dividend means that investors that purchase the stock on or after the 11th of February will not receive this dividend, which will be paid on the 26th of February.

Salisbury Bancorp's next dividend payment will be US$0.29 per share, on the back of last year when the company paid a total of US$1.16 to shareholders. Calculating the last year's worth of payments shows that Salisbury Bancorp has a trailing yield of 3.0% on the current share price of $38.5. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. So we need to check whether the dividend payments are covered, and if earnings are growing.

Check out our latest analysis for Salisbury 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. That's why it's good to see Salisbury Bancorp paying out a modest 28% of its earnings.

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

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

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. With that in mind, we're encouraged by the steady growth at Salisbury Bancorp, with earnings per share up 6.7% on average 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. It looks like the Salisbury Bancorp dividends are largely the same as they were 10 years ago.

The Bottom Line

Has Salisbury Bancorp got what it takes to maintain its dividend payments? Salisbury Bancorp has seen its earnings per share grow slowly in recent years, and the company reinvests more than half of its profits in the business, which generally bodes well for its future prospects. In summary, Salisbury Bancorp appears to have some promise as a dividend stock, and we'd suggest taking a closer look at it.

In light of that, while Salisbury Bancorp has an appealing dividend, it's worth knowing the risks involved with this stock. Case in point: We've spotted 1 warning sign for Salisbury Bancorp you should be aware of.

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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