Is Buying United Bancshares Inc (NASDAQ:UBOH) For Its Upcoming US$0.12 Dividend A Good Choice?
Shares of United Bancshares Inc (NASDAQ:UBOH) will begin trading ex-dividend in 2 days. To qualify for the dividend check of US$0.12 per share, investors must have owned the shares prior to 30 August 2018, which is the last day the company’s management will finalize their list of shareholders to which they will send dividend payments. What does this mean for current shareholders and potential investors? Below, I will explain how holding United Bancshares can impact your portfolio income stream, by analysing the stock’s most recent financial data and dividend attributes.
View our latest analysis for United Bancshares
5 questions to ask before buying a dividend stock
When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas:
Does it pay an annual yield higher than 75% of dividend payers?
Has it consistently paid a stable dividend without missing a payment or drastically cutting payout?
Has dividend per share amount increased over the past?
Is its earnings sufficient to payout dividend at the current rate?
Will it be able to continue to payout at the current rate in the future?
How does United Bancshares fare?
United Bancshares has a trailing twelve-month payout ratio of 29.8%, which means that the dividend is covered by earnings. Furthermore, analysts have not forecasted a dividends per share for the future, which makes it hard to determine the yield shareholders should expect, and whether the current payout is sustainable, moving forward.
If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. Not only have dividend payouts from United Bancshares fallen over the past 10 years, it has also been highly volatile during this time, with drops of over 25% in some years. This means that dividend hunters should probably steer clear of the stock, at least for now until the track record improves.
Compared to its peers, United Bancshares generates a yield of 2.1%, which is on the low-side for Banks stocks.
Next Steps:
Now you know to keep in mind the reason why investors should be careful investing in United Bancshares for the dividend. But if you are not exclusively a dividend investor, the stock could still be an interesting investment opportunity. Given that this is purely a dividend analysis, you should always research extensively before deciding whether or not a stock is an appropriate investment for you. I always recommend analysing the company’s fundamentals and underlying business before making an investment decision. I’ve put together three key aspects you should further examine:
Future Outlook: What are well-informed industry analysts predicting for UBOH’s future growth? Take a look at our free research report of analyst consensus for UBOH’s outlook.
Valuation: What is UBOH 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 UBOH is currently mispriced by the market.
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 editorial-team@simplywallst.com.
