Equity Bancshares, Inc. (NASDAQ:EQBK) Passed Our Checks, And It's About To Pay A US$0.08 Dividend
Equity Bancshares, Inc. (NASDAQ:EQBK) stock is about to trade ex-dividend in four days. The ex-dividend date is one business day before a company's record date, which is the date on which the company determines which shareholders are entitled to receive a dividend. The ex-dividend date is of consequence because whenever a stock is bought or sold, the trade takes at least two business day to settle. This means that investors who purchase Equity Bancshares' shares on or after the 30th of December will not receive the dividend, which will be paid on the 14th of January.
The upcoming dividend for Equity Bancshares is US$0.08 per share. If you buy this business for its dividend, you should have an idea of whether Equity Bancshares's dividend is reliable and sustainable. As a result, readers should always check whether Equity Bancshares has been able to grow its dividends, or if the dividend might be cut.
View our latest analysis for Equity Bancshares
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. Equity Bancshares is paying out just 2.1% of its profit after tax, which is comfortably low and leaves plenty of breathing room in the case of adverse events.
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.
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. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. For this reason, we're glad to see Equity Bancshares's earnings per share have risen 16% per annum over the last five years.
This is Equity Bancshares's first year of paying a dividend, so it doesn't have much of a history yet to compare to.
To Sum It Up
Is Equity Bancshares worth buying for its dividend? Typically, companies that are growing rapidly and paying out a low fraction of earnings are keeping the profits for reinvestment in the business. Perhaps even more importantly - this can sometimes signal management is focused on the long term future of the business. We think this is a pretty attractive combination, and would be interested in investigating Equity Bancshares more closely.
So while Equity Bancshares looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. In terms of investment risks, we've identified 2 warning signs with Equity Bancshares and understanding them should be part of your investment process.
A common investment mistake is buying the first interesting stock you see. Here you can find a list of promising dividend stocks with a greater than 2% yield and an upcoming dividend.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.
