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M&T Bank Corporation (NYSE:MTB) is about to trade ex-dividend in the next 4 days. This means that investors who purchase shares on or after the 30th of November will not receive the dividend, which will be paid on the 31st of December.
M&T Bank's next dividend payment will be US$1.10 per share. Last year, in total, the company distributed US$4.40 to shareholders. Calculating the last year's worth of payments shows that M&T Bank has a trailing yield of 3.6% on the current share price of $123.67. If you buy this business for its dividend, you should have an idea of whether M&T Bank's dividend is reliable and sustainable. As a result, readers should always check whether M&T Bank has been able to grow its dividends, or if the dividend might be cut.
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. That's why it's good to see M&T Bank paying out a modest 44% 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.
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. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. This is why it's a relief to see M&T Bank earnings per share are up 6.1% per annum over the last five years.
Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. M&T Bank has delivered 4.6% dividend growth per year on average over the past 10 years. It's encouraging to see the company lifting dividends while earnings are growing, suggesting at least some corporate interest in rewarding shareholders.
The Bottom Line
Is M&T Bank an attractive dividend stock, or better left on the shelf? M&T Bank 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. We think this is a pretty attractive combination, and would be interested in investigating M&T Bank more closely.
While it's tempting to invest in M&T Bank for the dividends alone, you should always be mindful of the risks involved. For example, we've found 2 warning signs for M&T Bank that we recommend you consider before investing in the business.
A common investment mistake is buying the first interesting stock you see. Here you can find a list of promising 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.
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