Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see BancorpSouth Bank (NYSE:BXS) is about to trade ex-dividend in the next 4 days. You will need to purchase shares before the 12th of December to receive the dividend, which will be paid on the 2nd of January.
BancorpSouth Bank's next dividend payment will be US$0.18 per share, on the back of last year when the company paid a total of US$0.76 to shareholders. Based on the last year's worth of payments, BancorpSouth Bank stock has a trailing yield of around 2.4% on the current share price of $31.36. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! As a result, readers should always check whether BancorpSouth Bank 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. BancorpSouth Bank paid out a comfortable 33% of its profit last year.
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?
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 fall far enough, the company could be forced to cut its dividend. For this reason, we're glad to see BancorpSouth Bank's earnings per share have risen 17% per annum over the last five years.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. BancorpSouth Bank's dividend payments per share have declined at 1.5% per year on average over the past ten years, which is uninspiring.
Has BancorpSouth Bank got what it takes to maintain its dividend payments? Typically, companies that are growing rapidly and paying out a low fraction of earnings are keeping the profits for reinvestment in the business. This strategy can add significant value to shareholders over the long term - as long as it's done without issuing too many new shares. Overall, BancorpSouth Bank looks like a promising dividend stock in this analysis, and we think it would be worth investigating further.
Wondering what the future holds for BancorpSouth Bank? See what the nine analysts we track are forecasting, with this visualisation of its historical and future estimated earnings and cash flow
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.
If you spot an error that warrants correction, please contact the editor at email@example.com. 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. Simply Wall St has no position in the stocks mentioned.
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