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Hingham Institution for Savings (NASDAQ:HIFS) Looks Like A Good Stock, And It's Going Ex-Dividend Soon

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Hingham Institution for Savings (NASDAQ:HIFS) is about to trade ex-dividend in the next 4 days. Ex-dividend means that investors that purchase the stock on or after the 3rd of April will not receive this dividend, which will be paid on the 15th of April.

Hingham Institution for Savings's next dividend payment will be US$0.42 per share. Last year, in total, the company distributed US$2.24 to shareholders. Based on the last year's worth of payments, Hingham Institution for Savings has a trailing yield of 1.6% on the current stock price of $141.95. If you buy this business for its dividend, you should have an idea of whether Hingham Institution for Savings's dividend is reliable and sustainable. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

View our latest analysis for Hingham Institution for Savings

Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. Hingham Institution for Savings paid out just 8.7% of its profit last year, which we think is conservatively low and leaves plenty of margin for unexpected circumstances.

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 how much of its profit Hingham Institution for Savings paid out over the last 12 months.

NasdaqGM:HIFS Historical Dividend Yield March 29th 2020
NasdaqGM:HIFS Historical Dividend Yield March 29th 2020

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. Fortunately for readers, Hingham Institution for Savings's earnings per share have been growing at 12% a year for the past five years.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Since the start of our data, ten years ago, Hingham Institution for Savings has lifted its dividend by approximately 7.8% a year on average. We're glad to see dividends rising alongside earnings over a number of years, which may be a sign the company intends to share the growth with shareholders.

The Bottom Line

Should investors buy Hingham Institution for Savings for the upcoming dividend? Companies like Hingham Institution for Savings that are growing rapidly and paying out a low fraction of earnings, are usually reinvesting heavily in their business. Perhaps even more importantly - this can sometimes signal management is focused on the long term future of the business. Hingham Institution for Savings ticks a lot of boxes for us from a dividend perspective, and we think these characteristics should mark the company as deserving of further attention.

So while Hingham Institution for Savings looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. In terms of investment risks, we've identified 1 warning sign with Hingham Institution for Savings and understanding them should be part of your investment process.

A common investment mistake is buying the first interesting stock you see. Here you can find a list of promising 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 editorial-team@simplywallst.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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.