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First Busey Corporation (NASDAQ:BUSE) is about to trade ex-dividend in the next 4 days. If you purchase the stock on or after the 23rd of July, you won't be eligible to receive this dividend, when it is paid on the 31st of July.
First Busey's upcoming dividend is US$0.22 a share, following on from the last 12 months, when the company distributed a total of US$0.88 per share to shareholders. Last year's total dividend payments show that First Busey has a trailing yield of 5.0% on the current share price of $17.5. If you buy this business for its dividend, you should have an idea of whether First Busey's dividend is reliable and sustainable. So we need to check whether the dividend payments are covered, and if earnings are growing.
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. First Busey is paying out an acceptable 51% of its profit, a common payout level among most companies.
Generally speaking, the lower a company's payout ratios, the more resilient its dividend usually is.
Have Earnings And Dividends Been Growing?
Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. 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 First Busey earnings per share are up 8.7% 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. First Busey has seen its dividend decline 0.9% per annum on average over the past ten years, which is not great to see.
The Bottom Line
Is First Busey worth buying for its dividend? Earnings per share have been growing at a reasonable rate, and the company is paying out a bit over half its earnings as dividends. It doesn't appear an outstanding opportunity, but could be worth a closer look.
So if you want to do more digging on First Busey, you'll find it worthwhile knowing the risks that this stock faces. For instance, we've identified 2 warning signs for First Busey (1 shouldn't be ignored) you should be aware of.
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.
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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