Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Investors Bancorp, Inc. (NASDAQ:ISBC) is about to trade ex-dividend in the next 4 days. This means that investors who purchase shares on or after the 8th of August will not receive the dividend, which will be paid on the 23rd of August.
Investors Bancorp's next dividend payment will be US$0.11 per share. Last year, in total, the company distributed US$0.44 to shareholders. Based on the last year's worth of payments, Investors Bancorp has a trailing yield of 4.0% on the current stock price of $11.11. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.
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. Investors Bancorp paid out more than half (66%) of its earnings last year, which is a regular payout ratio for most companies.
Generally speaking, the lower a company's payout ratios, the more resilient its dividend usually is.
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. Fortunately for readers, Investors Bancorp's earnings per share have been growing at 11% a year for the past five years.
The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Investors Bancorp has delivered 28% dividend growth per year on average over the past 7 years. It's exciting to see that both earnings and dividends per share have grown rapidly over the past few years.
Is Investors Bancorp worth buying for its dividend? Earnings per share are growing at an attractive rate, and Investors Bancorp is paying out a bit over half its profits. Overall, Investors Bancorp looks like a promising dividend stock in this analysis, and we think it would be worth investigating further.
Ever wonder what the future holds for Investors Bancorp? See what the five analysts we track are forecasting, with this visualisation of its historical and future estimated earnings and cash flow
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.
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.