M&T Bank Corporation (NYSE:MTB) Looks Interesting, And It's About To Pay A Dividend

M&T Bank Corporation (NYSE:MTB) is about to trade ex-dividend in the next three days. The ex-dividend date is usually set to be one business day before the record date which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the dividend. The ex-dividend date is an important date to be aware of as any purchase of the stock made on or after this date might mean a late settlement that doesn't show on the record date. In other words, investors can purchase M&T Bank's shares before the 3rd of September in order to be eligible for the dividend, which will be paid on the 30th of September.

The company's next dividend payment will be US$1.35 per share. Last year, in total, the company distributed US$5.40 to shareholders. Calculating the last year's worth of payments shows that M&T Bank has a trailing yield of 3.2% on the current share price of US$169.99. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

See our latest analysis for M&T Bank

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. That's why it's good to see M&T Bank paying out a modest 39% 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 that aren't growing their earnings can still be valuable, but it is even more important to assess the sustainability of the dividend if it looks like the company will struggle to grow. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. That explains why we're not overly excited about M&T Bank's flat earnings over the past five years. It's better than seeing them drop, certainly, but over the long term, all of the best dividend stocks are able to meaningfully grow their earnings per share.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. M&T Bank has delivered an average of 6.8% per year annual increase in its dividend, based on the past 10 years of dividend payments.

Final Takeaway

Should investors buy M&T Bank for the upcoming dividend? M&T Bank has seen its earnings per share stagnate in recent years, although the company reinvests more than half of its profits in the business, which could bode well for its future prospects. We think this is a pretty attractive combination, and would be interested in investigating M&T Bank more closely.

While it's tempting to invest in M&T Bank for the dividends alone, you should always be mindful of the risks involved. To help with this, we've discovered 1 warning sign for M&T Bank that you should be aware of before investing in their shares.

Generally, we wouldn't recommend just buying the first dividend stock you see. Here's a curated list of interesting stocks that are strong dividend payers.

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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.