Do These 3 Checks Before Buying Seacoast Banking Corporation of Florida (NASDAQ:SBCF) For Its Upcoming Dividend

Some investors rely on dividends for growing their wealth, and if you're one of those dividend sleuths, you might be intrigued to know that Seacoast Banking Corporation of Florida (NASDAQ:SBCF) is about to go ex-dividend in just four days. The ex-dividend date is usually set to be one business day before the record date which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the 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. Therefore, if you purchase Seacoast Banking Corporation of Florida's shares on or after the 14th of March, you won't be eligible to receive the dividend, when it is paid on the 29th of March.

The company's upcoming dividend is US$0.18 a share, following on from the last 12 months, when the company distributed a total of US$0.72 per share to shareholders. Based on the last year's worth of payments, Seacoast Banking Corporation of Florida stock has a trailing yield of around 2.9% on the current share price of US$25.11. 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.

See our latest analysis for Seacoast Banking Corporation of Florida

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. Seacoast Banking Corporation of Florida paid out 57% of its earnings to investors last year, a normal payout level for most businesses.

When a company paid out less in dividends than it earned in profit, this generally suggests its dividend is affordable. The lower the % of its profit that it pays out, the greater the margin of safety for the dividend if the business enters a downturn.

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

Have Earnings And Dividends Been Growing?

Businesses with shrinking earnings are tricky from a dividend perspective. If earnings fall far enough, the company could be forced to cut its dividend. So we're not too excited that Seacoast Banking Corporation of Florida's earnings are down 2.5% a year over 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. Seacoast Banking Corporation of Florida has delivered an average of 11% per year annual increase in its dividend, based on the past three years of dividend payments. 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.

To Sum It Up

Has Seacoast Banking Corporation of Florida got what it takes to maintain its dividend payments? We're not overly enthused to see Seacoast Banking Corporation of Florida's earnings in retreat at the same time as the company is paying out more than half of its earnings as dividends to shareholders. Seacoast Banking Corporation of Florida 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.

With that in mind though, if the poor dividend characteristics of Seacoast Banking Corporation of Florida don't faze you, it's worth being mindful of the risks involved with this business. To help with this, we've discovered 1 warning sign for Seacoast Banking Corporation of Florida that you should be aware of before investing in their shares.

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.