Guaranty Bancshares, Inc. (NYSE:GNTY) Looks Interesting, And It's About To Pay A Dividend

It looks like Guaranty Bancshares, Inc. (NYSE:GNTY) is about to go ex-dividend in the next 3 days. The ex-dividend date occurs one day before the record date which is the day on which shareholders need to be on the company's books in order to receive a dividend. The ex-dividend date is important because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend. Meaning, you will need to purchase Guaranty Bancshares' shares before the 22nd of March to receive the dividend, which will be paid on the 10th of April.

The company's next dividend payment will be US$0.24 per share. Last year, in total, the company distributed US$0.92 to shareholders. Based on the last year's worth of payments, Guaranty Bancshares has a trailing yield of 3.0% on the current stock price of US$30.44. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. So we need to investigate whether Guaranty Bancshares can afford its dividend, and if the dividend could grow.

View our latest analysis for Guaranty Bancshares

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. That's why it's good to see Guaranty Bancshares paying out a modest 36% of its earnings.

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.

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. With that in mind, we're encouraged by the steady growth at Guaranty Bancshares, with earnings per share up 10.0% on average 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. In the last seven years, Guaranty Bancshares has lifted its dividend by approximately 10.0% 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.

Final Takeaway

Has Guaranty Bancshares got what it takes to maintain its dividend payments? Guaranty Bancshares has seen its earnings per share grow slowly in recent years, and the company reinvests more than half of its profits in the business, which generally bodes well for its future prospects. We think this is a pretty attractive combination, and would be interested in investigating Guaranty Bancshares more closely.

While it's tempting to invest in Guaranty Bancshares for the dividends alone, you should always be mindful of the risks involved. We've identified 2 warning signs with Guaranty Bancshares (at least 1 which doesn't sit too well with us), and understanding them should be part of your investment process.

If you're in the market for strong dividend payers, we recommend checking our selection of top dividend stocks.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.