Investors who want to cash in on MidWestOne Financial Group Inc’s (NASDAQ:MOFG) upcoming dividend of US$0.20 per share have only 2 days left to buy the shares before its ex-dividend date, 30 August 2018, in time for dividends payable on the 17 September 2018. Is this future income stream a compelling catalyst for dividend investors to think about the stock as an investment today? Let’s take a look at MidWestOne Financial Group’s most recent financial data to examine its dividend characteristics in more detail.
5 questions to ask before buying a dividend stock
When researching a dividend stock, I always follow the following screening criteria:
- Is their annual yield among the top 25% of dividend payers?
- Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?
- Has dividend per share risen in the past couple of years?
- Does earnings amply cover its dividend payments?
- Will it have the ability to keep paying its dividends going forward?
How does MidWestOne Financial Group fare?
MidWestOne Financial Group has a trailing twelve-month payout ratio of 43.1%, which means that the dividend is covered by earnings. However, going forward, analysts expect MOFG’s payout to fall to 30.4% of its earnings, which leads to a dividend yield of around 2.5%. However, EPS should increase to $2.87, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment.
Reliablity is an important factor for dividend stocks, particularly for income investors who want a strong track record of payment and a positive outlook for future payout. Although MOFG’s per share payments have increased in the past 10 years, it has not been a completely smooth ride. Investors have seen reductions in the dividend per share in the past, although, it has picked up again.
Compared to its peers, MidWestOne Financial Group produces a yield of 2.3%, which is on the low-side for Banks stocks.
Keeping in mind the dividend characteristics above, MidWestOne Financial Group is definitely worth considering for investors looking to build a dedicated income portfolio. Given that this is purely a dividend analysis, I recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. I’ve put together three fundamental factors you should further research:
- Future Outlook: What are well-informed industry analysts predicting for MOFG’s future growth? Take a look at our free research report of analyst consensus for MOFG’s outlook.
- Valuation: What is MOFG worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether MOFG is currently mispriced by the market.
- Other Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at email@example.com.