It looks like Cadence Bancorporation (NYSE:CADE) is about to go ex-dividend in the next 4 days. You can purchase shares before the 29th of August in order to receive the dividend, which the company will pay on the 13th of September.
Cadence Bancorporation's next dividend payment will be US$0.17 per share. Last year, in total, the company distributed US$0.70 to shareholders. Calculating the last year's worth of payments shows that Cadence Bancorporation has a trailing yield of 4.6% on the current share price of $15.07. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Fortunately Cadence Bancorporation's payout ratio is modest, at just 37% of profit.
Generally speaking, the lower a company's payout ratios, the more resilient its dividend usually is.
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 earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. That's why it's comforting to see Cadence Bancorporation's earnings have been skyrocketing, up 49% per annum for the past five years.
Given that Cadence Bancorporation has only been paying a dividend for a year, there's not much of a past history to draw insight from.
To Sum It Up
From a dividend perspective, should investors buy or avoid Cadence Bancorporation? When companies are growing rapidly and retaining a majority of the profits within the business, it's usually a sign that reinvesting earnings creates more value than paying dividends to shareholders. This is one of the most attractive investment combinations under this analysis, as it can create substantial value for investors over the long run. Overall, Cadence Bancorporation looks like a promising dividend stock in this analysis, and we think it would be worth investigating further.
Curious what other investors think of Cadence Bancorporation? See what analysts are forecasting, with this visualisation of its historical and future estimated earnings and cash flow .
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.
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