Don't Race Out To Buy Banc of California, Inc. (NYSE:BANC) Just Because It's Going Ex-Dividend

By
Simply Wall St
Published
March 07, 2021
NYSE:BANC

Readers hoping to buy Banc of California, Inc. (NYSE:BANC) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. Ex-dividend means that investors that purchase the stock on or after the 12th of March will not receive this dividend, which will be paid on the 1st of April.

Banc of California's next dividend payment will be US$0.06 per share, on the back of last year when the company paid a total of US$0.24 to shareholders. Looking at the last 12 months of distributions, Banc of California has a trailing yield of approximately 1.2% on its current stock price of $19.42. If you buy this business for its dividend, you should have an idea of whether Banc of California's dividend is reliable and sustainable. So we need to check whether the dividend payments are covered, and if earnings are growing.

Check out our latest analysis for Banc of California

Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. Banc of California reported a loss last year, so it's not great to see that it has continued paying a dividend.

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

historic-dividend
NYSE:BANC Historic Dividend March 7th 2021

Have Earnings And Dividends Been Growing?

When earnings decline, dividend companies become much harder to analyse and own safely. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. Banc of California was unprofitable last year and, unfortunately, the general trend suggests its earnings have been in decline over the last five years, making us wonder if the dividend is sustainable at all.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Banc of California has delivered 1.8% dividend growth per year on average over the past 10 years.

Remember, you can always get a snapshot of Banc of California's financial health, by checking our visualisation of its financial health, here.

To Sum It Up

Is Banc of California an attractive dividend stock, or better left on the shelf? It's hard to get past the idea of Banc of California paying a dividend despite reporting a loss over the past year - especially when the general trend in its earnings also looks to be negative. All things considered, we're not optimistic about its dividend prospects, and would be inclined to leave it on the shelf for now.

With that being said, if you're still considering Banc of California as an investment, you'll find it beneficial to know what risks this stock is facing. Our analysis shows 1 warning sign for Banc of California and you should be aware of this before buying any shares.

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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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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