RBB Bancorp (NASDAQ:RBB) Passed Our Checks, And It's About To Pay A US$0.13 Dividend
Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see RBB Bancorp (NASDAQ:RBB) is about to trade ex-dividend in the next 4 days. This means that investors who purchase shares on or after the 6th of May will not receive the dividend, which will be paid on the 14th of May.
RBB Bancorp's upcoming dividend is US$0.13 a share, following on from the last 12 months, when the company distributed a total of US$0.33 per share to shareholders. Based on the last year's worth of payments, RBB Bancorp has a trailing yield of 1.6% on the current stock price of $21.08. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. So we need to investigate whether RBB Bancorp can afford its dividend, and if the dividend could grow.
See our latest analysis for RBB Bancorp
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. RBB Bancorp has a low and conservative payout ratio of just 20% 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 earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. Fortunately for readers, RBB Bancorp's earnings per share have been growing at 14% a year for the past five years.
Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. In the past four years, RBB Bancorp has increased its dividend at approximately 0.8% a year on average. Earnings per share have been growing much quicker than dividends, potentially because RBB Bancorp is keeping back more of its profits to grow the business.
Final Takeaway
Is RBB Bancorp an attractive dividend stock, or better left on the shelf? Typically, companies that are growing rapidly and paying out a low fraction of earnings are keeping the profits for reinvestment in the business. This strategy can add significant value to shareholders over the long term - as long as it's done without issuing too many new shares. RBB Bancorp ticks a lot of boxes for us from a dividend perspective, and we think these characteristics should mark the company as deserving of further attention.
So while RBB Bancorp looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. Our analysis shows 1 warning sign for RBB Bancorp and you should be aware of this before buying any shares.
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.
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. 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.
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