It looks like Signature Bank (NASDAQ:SBNY) is about to go ex-dividend in the next 4 days. You will need to purchase shares before the 31st of July to receive the dividend, which will be paid on the 15th of August.
Signature Bank’s next dividend payment will be US$0.56 per share, on the back of last year when the company paid a total of US$2.24 to shareholders. Calculating the last year’s worth of payments shows that Signature Bank has a trailing yield of 1.8% on the current share price of $123.98. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. As a result, readers should always check whether Signature Bank has been able to grow its dividends, or if the dividend might be cut.
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. Signature Bank is paying out just 15% of its profit after tax, which is comfortably low and leaves plenty of breathing room in the case of adverse events.
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.
Have Earnings And Dividends Been Growing?
Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. For this reason, we’re glad to see Signature Bank’s earnings per share have risen 18% per annum over the last five years.
Given that Signature Bank has only been paying a dividend for a year, there’s not much of a past history to draw insight from.
To Sum It Up
Is Signature Bank worth buying for its dividend? Companies like Signature Bank that are growing rapidly and paying out a low fraction of earnings, are usually reinvesting heavily in their business. This is one of the most attractive investment combinations under this analysis, as it can create substantial value for investors over the long run. Signature Bank 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.
Curious what other investors think of Signature Bank? See what analysts are forecasting, with this visualisation of its historical and future estimated earnings and cash flow .
If you’re in the market for dividend stocks, we recommend checking our list of top dividend stocks with a greater than 2% yield and an upcoming dividend.
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If you spot an error that warrants correction, please contact the editor at email@example.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.