Stock Analysis

Byline Bancorp, Inc. (NYSE:BY) Is About To Go Ex-Dividend, And It Pays A 1.4% Yield

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NYSE:BY
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Some investors rely on dividends for growing their wealth, and if you're one of those dividend sleuths, you might be intrigued to know that Byline Bancorp, Inc. (NYSE:BY) is about to go ex-dividend in just four days. This means that investors who purchase shares on or after the 8th of February will not receive the dividend, which will be paid on the 23rd of February.

Byline Bancorp's next dividend payment will be US$0.06 per share. Last year, in total, the company distributed US$0.12 to shareholders. Based on the last year's worth of payments, Byline Bancorp has a trailing yield of 1.4% on the current stock price of $16.86. 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! As a result, readers should always check whether Byline Bancorp has been able to grow its dividends, or if the dividend might be cut.

View our latest analysis for Byline Bancorp

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. Byline Bancorp has a low and conservative payout ratio of just 12% of its income after tax.

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.

historic-dividend
NYSE:BY Historic Dividend February 3rd 2021

Have Earnings And Dividends Been Growing?

Businesses with shrinking earnings are tricky from a dividend perspective. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. Readers will understand then, why we're concerned to see Byline Bancorp's earnings per share have dropped 8.1% a year over the past five years. Such a sharp decline casts doubt on the future sustainability of the dividend.

Given that Byline Bancorp has only been paying a dividend for a year, there's not much of a past history to draw insight from.

Final Takeaway

Should investors buy Byline Bancorp for the upcoming dividend? Byline Bancorp's earnings per share are down over the past five years, although it has the cushion of a low payout ratio, which would suggest a cut to the dividend is relatively unlikely. At best we would put it on a watch-list to see if business conditions improve, as it doesn't look like a clear opportunity right now.

If you're not too concerned about Byline Bancorp's ability to pay dividends, you should still be mindful of some of the other risks that this business faces. In terms of investment risks, we've identified 1 warning sign with Byline Bancorp and understanding them should be part of your investment process.

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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