Don't Race Out To Buy Umpqua Holdings Corporation (NASDAQ:UMPQ) Just Because It's Going Ex-Dividend

Readers hoping to buy Umpqua Holdings Corporation (NASDAQ:UMPQ) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. If you purchase the stock on or after the 12th of February, you won't be eligible to receive this dividend, when it is paid on the 26th of February.

Umpqua Holdings's next dividend payment will be US$0.21 per share. Last year, in total, the company distributed US$0.84 to shareholders. Last year's total dividend payments show that Umpqua Holdings has a trailing yield of 5.3% on the current share price of $15.8. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! So we need to investigate whether Umpqua Holdings can afford its dividend, and if the dividend could grow.

See our latest analysis for Umpqua Holdings

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. Umpqua Holdings lost money last year, so the fact that it's paying a dividend is certainly disconcerting. There might be a good reason for this, but we'd want to look into it further before getting comfortable.

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

Have Earnings And Dividends Been Growing?

Companies with falling earnings are riskier for dividend shareholders. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. Umpqua Holdings reported a loss last year, and the general trend suggests its earnings have also been declining in recent years, making us wonder if the dividend is at risk.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. In the past 10 years, Umpqua Holdings has increased its dividend at approximately 15% a year on average.

We update our analysis on Umpqua Holdings every 24 hours, so you can always get the latest insights on its financial health, here.

The Bottom Line

Is Umpqua Holdings an attractive dividend stock, or better left on the shelf? It's hard to get past the idea of Umpqua Holdings paying a dividend despite reporting a loss over the past year - especially when the general trend in its earnings also looks to be negative. These characteristics don't generally lead to outstanding dividend performance, and investors may not be happy with the results of owning this stock for its dividend.

Although, if you're still interested in Umpqua Holdings and want to know more, you'll find it very useful to know what risks this stock faces. To help with this, we've discovered 1 warning sign for Umpqua Holdings that you should be aware of before investing in their shares.

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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