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On the 30 May 2019, Macatawa Bank Corporation (NASDAQ:MCBC) will be paying shareholders an upcoming dividend amount of US$0.07 per share. However, investors must have bought the company's stock before 13 May 2019 in order to qualify for the payment. That means you have only 4 days left! 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.
5 checks you should use to assess a dividend stock
When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas:
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 dividend per share risen in the past couple of years?
Is is able to pay the current rate of dividends from its earnings?
Will it be able to continue to payout at the current rate in the future?
Does Macatawa Bank pass our checks?
The current trailing twelve-month payout ratio for the stock is 31%, meaning the dividend is sufficiently covered by earnings. Furthermore, analysts have not forecasted a dividends per share for the future, which makes it hard to determine the yield shareholders should expect, and whether the current payout is sustainable, moving forward.
When assessing the forecast sustainability of a dividend it is also worth considering the cash flow of the business. Cash flow is important because companies with strong cash flow can usually sustain higher payout ratios.
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. The reality is that it is too early to consider Macatawa Bank as a dividend investment. It has only been consistently paying dividends for 5 years, however, standard practice for reliable payers is to look for a 10-year minimum track record.
In terms of its peers, Macatawa Bank has a yield of 2.6%, which is on the low-side for Banks stocks.
Now you know to keep in mind the reason why investors should be careful investing in Macatawa Bank for the dividend. On the other hand, if you are not strictly just a dividend investor, the stock could still be offering some interesting investment opportunities. 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. I've put together three important aspects you should look at:
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.
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.
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.