U.S. markets closed
  • S&P Futures

    4,411.25
    -3.00 (-0.07%)
     
  • Dow Futures

    34,995.00
    -39.00 (-0.11%)
     
  • Nasdaq Futures

    15,113.75
    -4.00 (-0.03%)
     
  • Russell 2000 Futures

    2,208.80
    -4.60 (-0.21%)
     
  • Crude Oil

    72.07
    +0.16 (+0.22%)
     
  • Gold

    1,797.00
    -2.20 (-0.12%)
     
  • Silver

    25.19
    -0.12 (-0.49%)
     
  • EUR/USD

    1.1813
    +0.0006 (+0.05%)
     
  • 10-Yr Bond

    1.2760
    -0.0100 (-0.78%)
     
  • Vix

    17.58
    +0.38 (+2.21%)
     
  • GBP/USD

    1.3830
    +0.0006 (+0.05%)
     
  • USD/JPY

    110.2760
    -0.0990 (-0.09%)
     
  • BTC-USD

    37,102.30
    +1,333.47 (+3.73%)
     
  • CMC Crypto 200

    880.16
    -35.33 (-3.86%)
     
  • FTSE 100

    7,025.43
    -2.15 (-0.03%)
     
  • Nikkei 225

    27,833.29
    0.00 (0.00%)
     

Don't Race Out To Buy BankFinancial Corporation (NASDAQ:BFIN) Just Because It's Going Ex-Dividend

·3 min read

BankFinancial Corporation (NASDAQ:BFIN) stock is about to trade ex-dividend in four days. If you purchase the stock on or after the 9th of November, you won't be eligible to receive this dividend, when it is paid on the 27th of November.

BankFinancial's next dividend payment will be US$0.10 per share, on the back of last year when the company paid a total of US$0.40 to shareholders. Based on the last year's worth of payments, BankFinancial has a trailing yield of 5.2% on the current stock price of $7.69. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. As a result, readers should always check whether BankFinancial has been able to grow its dividends, or if the dividend might be cut.

View our latest analysis for BankFinancial

Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. BankFinancial is paying out an acceptable 60% of its profit, a common payout level among most companies.

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.

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

historic-dividend
historic-dividend

Have Earnings And Dividends Been Growing?

Companies with falling earnings are riskier for dividend shareholders. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. BankFinancial's earnings per share have fallen at approximately 20% a year over the previous five years. Ultimately, when earnings per share decline, the size of the pie from which dividends can be paid, shrinks.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Since the start of our data, 10 years ago, BankFinancial has lifted its dividend by approximately 3.6% a year on average. Growing the dividend payout ratio while earnings are declining can deliver nice returns for a while, but it's always worth checking for when the company can't increase the payout ratio any more - because then the music stops.

The Bottom Line

From a dividend perspective, should investors buy or avoid BankFinancial? We're not overly enthused to see BankFinancial's earnings in retreat at the same time as the company is paying out more than half of its earnings as dividends to shareholders. This is not an overtly appealing combination of characteristics, and we're just not that interested in this company's dividend.

With that being said, if you're still considering BankFinancial as an investment, you'll find it beneficial to know what risks this stock is facing. To help with this, we've discovered 2 warning signs for BankFinancial (1 shouldn't be ignored!) that you ought to be aware of before buying the shares.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.