It looks like WesBanco, Inc. (NASDAQ:WSBC) is about to go ex-dividend in the next 2 days. This means that investors who purchase shares on or after the 12th of March will not receive the dividend, which will be paid on the 1st of April.
WesBanco's next dividend payment will be US$0.32 per share, and in the last 12 months, the company paid a total of US$1.24 per share. Based on the last year's worth of payments, WesBanco stock has a trailing yield of around 4.5% on the current share price of $28.24. If you buy this business for its dividend, you should have an idea of whether WesBanco's dividend is reliable and sustainable. As a result, readers should always check whether WesBanco has been able to grow its dividends, or if the dividend might be cut.
Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. Fortunately WesBanco's payout ratio is modest, at just 44% of profit.
When a company paid out less in dividends than it earned in profit, this generally suggests its dividend is affordable. The lower the % of its profit that it pays out, the greater the margin of safety for the dividend if the business enters a downturn.
Have Earnings And Dividends Been Growing?
Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. This is why it's a relief to see WesBanco earnings per share are up 3.4% per annum over the last five years.
The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. In the last ten years, WesBanco has lifted its dividend by approximately 1.3% a year on average.
Is WesBanco worth buying for its dividend? It has been growing its earnings per share somewhat in recent years, although it reinvests more than half its earnings in the business, which could suggest there are some growth projects that have not yet reached fruition. In summary, WesBanco appears to have some promise as a dividend stock, and we'd suggest taking a closer look at it.
So while WesBanco looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. For example, we've found 3 warning signs for WesBanco that we recommend you consider before investing in the business.
We wouldn't recommend just buying the first dividend stock you see, though. Here's a list of interesting dividend stocks with a greater than 2% yield and an upcoming dividend.
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