There's A Lot To Like About M&T Bank's (NYSE:MTB) Upcoming US$1.35 Dividend

Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see M&T Bank Corporation (NYSE:MTB) is about to trade ex-dividend in the next four days. Typically, the ex-dividend date is one business day before the record date, which is the date on which a company determines the shareholders eligible to receive a dividend. The ex-dividend date is important as the process of settlement involves a full business day. So if you miss that date, you would not show up on the company's books on the record date. Meaning, you will need to purchase M&T Bank's shares before the 3rd of March to receive the dividend, which will be paid on the 31st of March.

The company's upcoming dividend is US$1.35 a share, following on from the last 12 months, when the company distributed a total of US$5.40 per share to shareholders. Looking at the last 12 months of distributions, M&T Bank has a trailing yield of approximately 2.8% on its current stock price of US$190.61. If you buy this business for its dividend, you should have an idea of whether M&T Bank's dividend is reliable and sustainable. So we need to check whether the dividend payments are covered, and if earnings are growing.

View our latest analysis for M&T Bank

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. M&T Bank paid out a comfortable 36% of its profit last year.

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.

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 earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. It's not encouraging to see that M&T Bank's earnings are effectively flat 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.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Since the start of our data, 10 years ago, M&T Bank has lifted its dividend by approximately 6.8% a year on average.

To Sum It Up

Is M&T Bank worth buying for its 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. Overall, M&T Bank looks like a promising dividend stock in this analysis, and we think it would be worth investigating further.

Wondering what the future holds for M&T Bank? See what the 14 analysts we track are forecasting, with this visualisation of its historical and future estimated earnings and cash flow

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.