Do These 3 Checks Before Buying Texas Community Bancshares, Inc. (NASDAQ:TCBS) For Its Upcoming Dividend
Texas Community Bancshares, Inc. (NASDAQ:TCBS) stock is about to trade ex-dividend in four days. The ex-dividend date is one business day before a company's record date, which is the date on which the company determines which shareholders are entitled 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. In other words, investors can purchase Texas Community Bancshares' shares before the 13th of March in order to be eligible for the dividend, which will be paid on the 28th of March.
The company's next dividend payment will be US$0.04 per share. Last year, in total, the company distributed US$0.12 to shareholders. Last year's total dividend payments show that Texas Community Bancshares has a trailing yield of 0.9% on the current share price of US$13.405. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! As a result, readers should always check whether Texas Community Bancshares has been able to grow its dividends, or if the dividend might be cut.
View our latest analysis for Texas Community Bancshares
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Texas Community Bancshares lost money last year, so the fact that it's paying a dividend is certainly disconcerting. There might be a good reason for this, but we'd want to look into it further before getting comfortable. Texas Community Bancshares paid a dividend despite reporting negative free cash flow last year. That's typically a bad combination and - if this were more than a one-off - not sustainable.
Click here to see how much of its profit Texas Community Bancshares paid out over the last 12 months.
Have Earnings And Dividends Been Growing?
When earnings decline, dividend companies become much harder to analyse and own safely. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. Texas Community Bancshares was unprofitable last year, and sadly its loss per share worsened by 141% on the previous year.
Given that Texas Community Bancshares has only been paying a dividend for a year, there's not much of a past history to draw insight from.
Remember, you can always get a snapshot of Texas Community Bancshares's financial health, by checking our visualisation of its financial health, here.
Final Takeaway
Has Texas Community Bancshares got what it takes to maintain its dividend payments? It's definitely not great to see that it paid a dividend despite reporting a loss last year. Worse, the general trend in its earnings looks negative in recent times. This is not an overtly appealing combination of characteristics, and we're just not that interested in this company's dividend.
Although, if you're still interested in Texas Community Bancshares and want to know more, you'll find it very useful to know what risks this stock faces. To help with this, we've discovered 3 warning signs for Texas Community Bancshares (1 is significant!) that you ought to be aware of before buying the shares.
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.