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American National Bankshares Inc. (NASDAQ:AMNB) Looks Like A Good Stock, And It's Going Ex-Dividend Soon

Simply Wall St
·3 min read

Readers hoping to buy American National Bankshares Inc. (NASDAQ:AMNB) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. You can purchase shares before the 3rd of December in order to receive the dividend, which the company will pay on the 18th of December.

American National Bankshares's next dividend payment will be US$0.27 per share, on the back of last year when the company paid a total of US$1.08 to shareholders. Based on the last year's worth of payments, American National Bankshares has a trailing yield of 4.0% on the current stock price of $27.2. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. As a result, readers should always check whether American National Bankshares has been able to grow its dividends, or if the dividend might be cut.

See our latest analysis for American National Bankshares

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. That's why it's good to see American National Bankshares paying out a modest 41% of its earnings.

Companies that pay out less in dividends than they earn in profits generally have more sustainable dividends. The lower the payout ratio, the more wiggle room the business has before it could be forced to cut the dividend.

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

historic-dividend
historic-dividend

Have Earnings And Dividends Been Growing?

Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. With that in mind, we're encouraged by the steady growth at American National Bankshares, with earnings per share up 10.0% on average over the last five years.

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, American National Bankshares has lifted its dividend by approximately 1.6% a year on average.

The Bottom Line

Has American National Bankshares got what it takes to maintain its dividend payments? American National Bankshares has seen its earnings per share grow slowly in recent years, and the company reinvests more than half of its profits in the business, which generally bodes well for its future prospects. Overall, American National Bankshares looks like a promising dividend stock in this analysis, and we think it would be worth investigating further.

While it's tempting to invest in American National Bankshares for the dividends alone, you should always be mindful of the risks involved. To help with this, we've discovered 2 warning signs for American National Bankshares (1 is potentially serious!) that you ought to be aware of before buying the shares.

If you're in the market for dividend stocks, we recommend checking our list of top dividend stocks with a greater than 2% yield and an upcoming dividend.

This article by Simply Wall St is general in nature. 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.