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Investors who want to cash in on Macatawa Bank Corporation’s (NASDAQ:MCBC) upcoming dividend of $0.06 per share have only 3 days left to buy the shares before its ex-dividend date, 12 February 2018, in time for dividends payable on the 28 February 2018. Is this future income a persuasive enough catalyst for investors to think about Macatawa Bank as an investment today? Below, I’m going to look at the latest data and analyze the stock and its dividend property in further detail. View our latest analysis for Macatawa Bank
5 questions to ask before buying a dividend stock
If you are a dividend investor, you should always assess these five key metrics:
Is it paying an annual yield above 75% of dividend payers?
Has it consistently paid a stable dividend without missing a payment or drastically cutting payout?
Has dividend per share risen in the past couple of years?
Does earnings amply cover its dividend payments?
Will the company be able to keep paying dividend based on the future earnings growth?
How does Macatawa Bank fare?
Macatawa Bank has a trailing twelve-month payout ratio of 37.51%, which means that the dividend is covered by earnings. In the near future, analysts are predicting a payout ratio of 33.77%, leading to a dividend yield of around 2.41%. Moreover, EPS should increase to $0.69. Reliablity is an important factor for dividend stocks, particularly for income investors who want a strong track record of payment and a positive outlook for future payout. Not only have dividend payouts from Macatawa Bank fallen over the past 10 years, it has also been highly volatile during this time, with drops of over 25% in some years. These characteristics do not bode well for income investors seeking reliable stream of dividends. In terms of its peers, Macatawa Bank produces a yield of 2.39%, which is on the low-side for Banks stocks.
Whilst there are few things you may like about Macatawa Bank from a dividend stock perspective, the truth is that overall it probably is not the best choice for a dividend investor. But if you are not exclusively a dividend investor, the stock could still be an interesting investment opportunity. Given that this is purely a dividend analysis, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. Below, I’ve compiled three important aspects you should further research:
1. Future Outlook: What are well-informed industry analysts predicting for MCBC’s future growth? Take a look at our free research report of analyst consensus for MCBC’s outlook.
2. Valuation: What is MCBC worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether MCBC is currently mispriced by the market.
3. Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.