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Allegiance Bancshares, Inc. (NASDAQ:ABTX) stock is about to trade ex-dividend in 3 days. You can purchase shares before the 25th of February in order to receive the dividend, which the company will pay on the 15th of March.
Allegiance Bancshares'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, Allegiance Bancshares has a trailing yield of approximately 1.3% on its current stock price of $37.11. If you buy this business for its dividend, you should have an idea of whether Allegiance Bancshares's dividend is reliable and sustainable. So we need to check whether the dividend payments are covered, and if earnings are growing.
Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. Allegiance Bancshares paid out just 18% of its profit last year, which we think is conservatively low and leaves plenty of margin for unexpected circumstances.
Companies that pay out less in dividends than they earn in profits generally have more sustainable dividends. The lower the payout ratio, the more wiggle room the business has before it could be forced to cut the dividend.
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. This is why it's a relief to see Allegiance Bancshares earnings per share are up 8.9% per annum over the last five years.
Unfortunately Allegiance Bancshares has only been paying a dividend for a year or so, so there's not much of a history to draw insight from.
Is Allegiance Bancshares worth buying for its dividend? It has been growing its earnings per share somewhat in recent years, although it reinvests more than half its earnings in the business, which could suggest there are some growth projects that have not yet reached fruition. Overall, Allegiance Bancshares looks like a promising dividend stock in this analysis, and we think it would be worth investigating further.
Ever wonder what the future holds for Allegiance Bancshares? See what the five analysts we track are forecasting, with this visualisation of its historical and future estimated earnings and cash flow
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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