Macatawa Bank Corporation (NASDAQ:MCBC) Looks Like A Good Stock, And It's Going Ex-Dividend Soon
Macatawa Bank Corporation (NASDAQ:MCBC) stock is about to trade ex-dividend in four days. The ex-dividend date is one business day before a company's record date, which is the date on which the company determines which shareholders are entitled to receive a dividend. The ex-dividend date is of consequence because whenever a stock is bought or sold, the trade takes at least two business day to settle. This means that investors who purchase Macatawa Bank's shares on or after the 13th of November will not receive the dividend, which will be paid on the 29th of November.
The company's next dividend payment will be US$0.09 per share, on the back of last year when the company paid a total of US$0.32 to shareholders. Based on the last year's worth of payments, Macatawa Bank has a trailing yield of 3.4% on the current stock price of $9.54. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! As a result, readers should always check whether Macatawa Bank has been able to grow its dividends, or if the dividend might be cut.
Check out our latest analysis for Macatawa Bank
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. Macatawa Bank has a low and conservative payout ratio of just 24% of its income after tax.
Generally speaking, the lower a company's payout ratios, the more resilient its dividend usually is.
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. It's encouraging to see Macatawa Bank has grown its earnings rapidly, up 23% 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. Macatawa Bank has delivered 15% dividend growth per year on average over the past 10 years. It's exciting to see that both earnings and dividends per share have grown rapidly over the past few years.
To Sum It Up
From a dividend perspective, should investors buy or avoid Macatawa Bank? Typically, companies that are growing rapidly and paying out a low fraction of earnings are keeping the profits for reinvestment in the 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. In summary, Macatawa Bank appears to have some promise as a dividend stock, and we'd suggest taking a closer look at it.
While it's tempting to invest in Macatawa Bank for the dividends alone, you should always be mindful of the risks involved. Case in point: We've spotted 1 warning sign for Macatawa Bank you should be aware of.
Generally, we wouldn't recommend just buying the first dividend stock you see. Here's a curated list of interesting stocks that are strong dividend payers.
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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.
