Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Ohio Valley Banc Corp. (NASDAQ:OVBC) is about to trade ex-dividend in the next 4 days. This means that investors who purchase shares on or after the 24th of October will not receive the dividend, which will be paid on the 10th of November.
Ohio Valley Banc's next dividend payment will be US$0.2 per share, and in the last 12 months, the company paid a total of US$0.8 per share. Based on the last year's worth of payments, Ohio Valley Banc has a trailing yield of 2.3% on the current stock price of $36.72. 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 Ohio Valley Banc has been able to grow its dividends, or if the dividend might be cut.
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Ohio Valley Banc paid out a comfortable 40% of its profit last year.
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.
Have Earnings And Dividends Been Growing?
Companies that aren't growing their earnings can still be valuable, but it is even more important to assess the sustainability of the dividend if it looks like the company will struggle to grow. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. It's not encouraging to see that Ohio Valley Banc's earnings are effectively flat over the past five years. Better than seeing them fall off a cliff, for sure, but the best dividend stocks grow their earnings meaningfully over the long run.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. In the last ten years, Ohio Valley Banc has lifted its dividend by approximately 1.0% a year on average.
To Sum It Up
Should investors buy Ohio Valley Banc for the upcoming dividend? Ohio Valley Banc has seen its earnings per share stagnate in recent years, although the company reinvests more than half of its profits in the business, which could bode well for its future prospects. We think this is a pretty attractive combination, and would be interested in investigating Ohio Valley Banc more closely.
Want to learn more about Ohio Valley Banc's dividend performance? Check out this visualisation of its historical revenue and earnings growth.
If you're in the market for dividend stocks, we recommend checking our list of top 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 firstname.lastname@example.org. 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.