Stock Analysis

Community Bank System, Inc. (NYSE:CBU) Pays A US$0.42 Dividend In Just Three Days

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NYSE:CBU
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Readers hoping to buy Community Bank System, Inc. (NYSE:CBU) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. This means that investors who purchase shares on or after the 11th of December will not receive the dividend, which will be paid on the 11th of January.

Community Bank System's next dividend payment will be US$0.42 per share, on the back of last year when the company paid a total of US$1.68 to shareholders. Based on the last year's worth of payments, Community Bank System has a trailing yield of 2.6% on the current stock price of $64.79. 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! That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

See our latest analysis for Community Bank System

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. Community Bank System is paying out an acceptable 54% of its profit, a common payout level among most companies.

When a company paid out less in dividends than it earned in profit, this generally suggests its dividend is affordable. The lower the % of its profit that it pays out, the greater the margin of safety for the dividend if the business enters a downturn.

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

historic-dividend
NYSE:CBU Historic Dividend December 7th 2020

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 business enters a downturn and the dividend is cut, the company could see its value fall precipitously. This is why it's a relief to see Community Bank System earnings per share are up 6.4% per annum over the last five years.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. In the past 10 years, Community Bank System has increased its dividend at approximately 6.7% a year on average. We're glad to see dividends rising alongside earnings over a number of years, which may be a sign the company intends to share the growth with shareholders.

To Sum It Up

Has Community Bank System got what it takes to maintain its dividend payments? Earnings per share have been growing at a reasonable rate, and the company is paying out a bit over half its earnings as dividends. In sum this is a middling combination, and we find it hard to get excited about the company from a dividend perspective.

However if you're still interested in Community Bank System as a potential investment, you should definitely consider some of the risks involved with Community Bank System. To help with this, we've discovered 3 warning signs for Community Bank System (1 is potentially serious!) that you ought to be aware of before buying the 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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What are the risks and opportunities for Community Bank System?

Community Bank System, Inc. operates as the bank holding company for Community Bank, N.A.

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Rewards

  • Trading at 16% below our estimate of its fair value

  • Earnings are forecast to grow 3.9% per year

Risks

No risks detected for CBU from our risks checks.

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