Be Sure To Check Out South Plains Financial, Inc. (NASDAQ:SPFI) Before It Goes Ex-Dividend

South Plains Financial, Inc. (NASDAQ:SPFI) stock is about to trade ex-dividend in three days. Investors can purchase shares before the 29th of January in order to be eligible for this dividend, which will be paid on the 16th of February.

South Plains Financial's next dividend payment will be US$0.05 per share. Last year, in total, the company distributed US$0.20 to shareholders. Based on the last year's worth of payments, South Plains Financial has a trailing yield of 1.0% on the current stock price of $20.09. If you buy this business for its dividend, you should have an idea of whether South Plains Financial's dividend is reliable and sustainable. So we need to investigate whether South Plains Financial can afford its dividend, and if the dividend could grow.

Check out our latest analysis for South Plains Financial

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. South Plains Financial paid out just 5.5% of its profit last year, which we think is conservatively low and leaves plenty of margin for unexpected circumstances.

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?

Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. If earnings fall far enough, the company could be forced to cut its dividend. With that in mind, we're encouraged by the steady growth at South Plains Financial, with earnings per share up 6.5% on average over the last three years.

Given that South Plains Financial 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

Has South Plains Financial got what it takes to maintain its dividend payments? It has been growing its earnings per share somewhat in recent years, although it reinvests more than half its earnings in the business, which could suggest there are some growth projects that have not yet reached fruition. South Plains Financial 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.

While it's tempting to invest in South Plains Financial for the dividends alone, you should always be mindful of the risks involved. Every company has risks, and we've spotted 2 warning signs for South Plains Financial (of which 1 doesn't sit too well with us!) you should know about.

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.

When trading South Plains Financial or any other investment, use the platform considered by many to be the Professional's Gateway to the Worlds Market, Interactive Brokers. You get the lowest-cost* trading on stocks, options, futures, forex, bonds and funds worldwide from a single integrated account. Promoted

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.
^*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.