Investors who want to cash in on Evans Bancorp, Inc.’s (NYSEMKT:EVBN) upcoming dividend of US$0.52 per share have only 4 days left to buy the shares before its ex-dividend date, 12 March 2019, in time for dividends payable on the 03 April 2019. Is this future income stream a compelling catalyst for dividend investors to think about the stock as an investment today? Let’s take a look at Evans Bancorp’s most recent financial data to examine its dividend characteristics in more detail.
5 questions to ask before buying a dividend stock
Whenever I am looking at a potential dividend stock investment, I always check these five metrics:
- Is it the top 25% annual dividend yield payer?
- Has it consistently paid a stable dividend without missing a payment or drastically cutting payout?
- Has the amount of dividend per share grown over the past?
- Does earnings amply cover its dividend payments?
- Will it be able to continue to payout at the current rate in the future?
Does Evans Bancorp pass our checks?
The current trailing twelve-month payout ratio for the stock is 27%, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting a payout ratio of 25% which, assuming the share price stays the same, leads to a dividend yield of 2.6%. Furthermore, EPS should increase to $3.43.
When thinking about whether a dividend is sustainable, another factor to consider is the cash flow. Companies with strong cash flow can sustain a higher payout ratio, while companies with weaker cash flow generally cannot.
If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. In the case of EVBN it has increased its DPS from $0.82 to $1.04 in the past 10 years. During this period it has not missed a payment, as one would expect for a company increasing its dividend. This is an impressive feat, which makes EVBN a true dividend rockstar.
Compared to its peers, Evans Bancorp has a yield of 2.9%, which is high for Banks stocks but still below the market’s top dividend payers.
Considering the dividend attributes we analyzed above, Evans Bancorp is definitely worth keeping an eye on for someone looking to build a dedicated income portfolio. 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 essential aspects you should look at:
- Future Outlook: What are well-informed industry analysts predicting for EVBN’s future growth? Take a look at our free research report of analyst consensus for EVBN’s outlook.
- Valuation: What is EVBN 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 EVBN is currently mispriced by the market.
- Other Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.
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.
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. Thank you for reading.