Fauquier Bankshares, Inc. (NASDAQ:FBSS) stock is about to trade ex-dividend in 3 days time. Investors can purchase shares before the 12th of September in order to be eligible for this dividend, which will be paid on the 1st of October.
Fauquier Bankshares's next dividend payment will be US$0.12 per share, on the back of last year when the company paid a total of US$0.48 to shareholders. Looking at the last 12 months of distributions, Fauquier Bankshares has a trailing yield of approximately 2.3% on its current stock price of $20.65. If you buy this business for its dividend, you should have an idea of whether Fauquier Bankshares's dividend is reliable and sustainable. As a result, readers should always check whether Fauquier Bankshares has been able to grow its dividends, or if the dividend might be cut.
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. That's why it's good to see Fauquier Bankshares paying out a modest 30% of its earnings.
Generally speaking, the lower a company's payout ratios, the more resilient its dividend usually is.
Have Earnings And Dividends Been Growing?
Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. This is why it's a relief to see Fauquier Bankshares earnings per share are up 6.7% per annum over the last five years.
Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Fauquier Bankshares's dividend payments per share have declined at 5.0% per year on average over the past 10 years, which is uninspiring. It's unusual to see earnings per share increasing at the same time as dividends per share have been in decline. We'd hope it's because the company is reinvesting heavily in its business, but it could also suggest business is lumpy.
Has Fauquier Bankshares got what it takes to maintain its dividend payments? Fauquier Bankshares has seen its earnings per share grow slowly in recent years, and the company reinvests more than half of its profits in the business, which generally bodes well for its future prospects. In summary, Fauquier Bankshares appears to have some promise as a dividend stock, and we'd suggest taking a closer look at it.
Want to learn more about Fauquier Bankshares's dividend performance? Check out this visualisation of its historical revenue and earnings growth.
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.
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