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It looks like County Bancorp, Inc. (NASDAQ:ICBK) is about to go ex-dividend in the next four days. Ex-dividend means that investors that purchase the stock on or after the 3rd of December will not receive this dividend, which will be paid on the 18th of December.
County Bancorp's next dividend payment will be US$0.10 per share. Last year, in total, the company distributed US$0.28 to shareholders. Based on the last year's worth of payments, County Bancorp has a trailing yield of 1.8% on the current stock price of $21.74. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. We need to see whether the dividend is covered by earnings and if it's growing.
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. County Bancorp paid out a comfortable 44% of its profit last year.
Generally speaking, the lower a company's payout ratios, the more resilient its dividend usually is.
Have Earnings And Dividends Been Growing?
Businesses with shrinking earnings are tricky from a dividend perspective. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. Readers will understand then, why we're concerned to see County Bancorp's earnings per share have dropped 19% a year over the past five years. Ultimately, when earnings per share decline, the size of the pie from which dividends can be paid, shrinks.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. In the last six years, County Bancorp has lifted its dividend by approximately 16% a year on average.
To Sum It Up
From a dividend perspective, should investors buy or avoid County Bancorp? County Bancorp's earnings per share are down over the past five years, although it has the cushion of a low payout ratio, which would suggest a cut to the dividend is relatively unlikely. It doesn't appear an outstanding opportunity, but could be worth a closer look.
So if you want to do more digging on County Bancorp, you'll find it worthwhile knowing the risks that this stock faces. In terms of investment risks, we've identified 4 warning signs with County Bancorp and understanding them should be part of your investment process.
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.
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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