Here's What We Like About Westamerica Bancorporation's (NASDAQ:WABC) Upcoming Dividend
Westamerica Bancorporation (NASDAQ:WABC) stock is about to trade ex-dividend in two days. The ex-dividend date is one business day before the record date, which is the cut-off date for shareholders to be present on the company's books to be eligible for a dividend payment. The ex-dividend date is an important date to be aware of as any purchase of the stock made on or after this date might mean a late settlement that doesn't show on the record date. In other words, investors can purchase Westamerica Bancorporation's shares before the 4th of August in order to be eligible for the dividend, which will be paid on the 18th of August.
The company's next dividend payment will be US$0.44 per share, and in the last 12 months, the company paid a total of US$1.68 per share. Based on the last year's worth of payments, Westamerica Bancorporation stock has a trailing yield of around 3.4% on the current share price of $49.19. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. As a result, readers should always check whether Westamerica Bancorporation has been able to grow its dividends, or if the dividend might be cut.
See our latest analysis for Westamerica Bancorporation
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Westamerica Bancorporation paid out a comfortable 29% of its profit last year.
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?
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 business enters a downturn and the dividend is cut, the company could see its value fall precipitously. It's encouraging to see Westamerica Bancorporation has grown its earnings rapidly, up 25% a year for the past five years.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Westamerica Bancorporation has delivered 1.3% dividend growth per year on average over the past 10 years. It's good to see both earnings and the dividend have improved - although the former has been rising much quicker than the latter, possibly due to the company reinvesting more of its profits in growth.
The Bottom Line
From a dividend perspective, should investors buy or avoid Westamerica Bancorporation? Companies like Westamerica Bancorporation that are growing rapidly and paying out a low fraction of earnings, are usually reinvesting heavily in their business. This is one of the most attractive investment combinations under this analysis, as it can create substantial value for investors over the long run. We think this is a pretty attractive combination, and would be interested in investigating Westamerica Bancorporation more closely.
On that note, you'll want to research what risks Westamerica Bancorporation is facing. For example - Westamerica Bancorporation has 1 warning sign we think you should be aware of.
If you're in the market for strong dividend payers, we recommend checking our selection of top dividend stocks.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.
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