Fidelity D & D Bancorp, Inc. (NASDAQ:FDBC) is about to trade ex-dividend in the next four 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 as the process of settlement involves two full business days. So if you miss that date, you would not show up on the company’s books on the record date. Therefore, if you purchase Fidelity D & D Bancorp’s shares on or after the 20th of August, you won’t be eligible to receive the dividend, when it is paid on the 10th of September.
The company’s upcoming dividend is US$0.38 a share, following on from the last 12 months, when the company distributed a total of US$1.52 per share to shareholders. Looking at the last 12 months of distributions, Fidelity D & D Bancorp has a trailing yield of approximately 3.4% on its current stock price of US$44.29. If you buy this business for its dividend, you should have an idea of whether Fidelity D & D Bancorp’s dividend is reliable and sustainable. As a result, readers should always check whether Fidelity D & D Bancorp has been able to grow its dividends, or if the dividend might be cut.
Check out our latest analysis for Fidelity D & D 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. Fidelity D & D Bancorp paid out 54% of its earnings to investors last year, a normal payout level for most businesses.
Generally speaking, the lower a company’s payout ratios, the more resilient its dividend usually is.
Click here to see how much of its profit Fidelity D & D Bancorp paid out over the last 12 months.
Have Earnings And Dividends Been Growing?
Stocks with flat earnings can still be attractive dividend payers, but it is important to be more conservative with your approach and demand a greater margin for safety when it comes to dividend sustainability. 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 Fidelity D & D Bancorp’s earnings are effectively flat over the past five years. We’d take that over an earnings decline any day, but in the long run, the best dividend stocks all grow their earnings per share.
The main way most investors will assess a company’s dividend prospects is by checking the historical rate of dividend growth. Fidelity D & D Bancorp has delivered 8.6% dividend growth per year on average over the past 10 years.
The Bottom Line
Is Fidelity D & D Bancorp worth buying for its dividend? Earnings per share have not grown at all, and the company pays out a bit over half its profits to shareholders. Fidelity D & D Bancorp doesn’t appear to have a lot going for it, and we’re not inclined to take a risk on owning it for the dividend.
So if you’re still interested in Fidelity D & D Bancorp despite it’s poor dividend qualities, you should be well informed on some of the risks facing this stock. Our analysis shows 2 warning signs for Fidelity D & D Bancorp and you should be aware of them before buying any 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.
Source: finance.yahoo.com
