Readers hoping to buy S&T Bancorp, Inc. (NASDAQ:STBA) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. Investors can purchase shares before the 31st of July in order to be eligible for this dividend, which will be paid on the 15th of August.
S&T Bancorp’s next dividend payment will be US$0.27 per share, and in the last 12 months, the company paid a total of US$1.08 per share. Calculating the last year’s worth of payments shows that S&T Bancorp has a trailing yield of 2.9% on the current share price of $37.41. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. We need to see whether the dividend is covered by earnings and if it’s growing.
If a company pays out more in dividends than it earned, then the dividend might become unsustainable – hardly an ideal situation. Fortunately S&T Bancorp’s payout ratio is modest, at just 35% of profit.
Generally speaking, the lower a company’s payout ratios, the more resilient its dividend usually is.
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. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. For this reason, we’re glad to see S&T Bancorp’s earnings per share have risen 13% per annum 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. S&T Bancorp has seen its dividend decline 1.4% per annum on average over the past 10 years, which is not great to see.
Has S&T Bancorp 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. Perhaps even more importantly – this can sometimes signal management is focused on the long term future of the business. In summary, S&T Bancorp appears to have some promise as a dividend stock, and we’d suggest taking a closer look at it.
Wondering what the future holds for S&T Bancorp? See what the four analysts we track are forecasting, with this visualisation of its historical and future estimated earnings and cash flow
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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If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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.