Bridge Bancorp, Inc. (NASDAQ:BDGE) is about to trade ex-dividend in the next 4 days. You will need to purchase shares before the 17th of April to receive the dividend, which will be paid on the 27th of April.
Bridge Bancorp's next dividend payment will be US$0.24 per share. Last year, in total, the company distributed US$0.96 to shareholders. Calculating the last year's worth of payments shows that Bridge Bancorp has a trailing yield of 4.6% on the current share price of $20.68. If you buy this business for its dividend, you should have an idea of whether Bridge Bancorp's dividend is reliable and sustainable. So we need to investigate whether Bridge Bancorp can afford its dividend, and if the dividend could grow.
Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. That's why it's good to see Bridge Bancorp paying out a modest 36% of its earnings.
Companies that pay out less in dividends than they earn in profits generally have more sustainable dividends. The lower the payout ratio, the more wiggle room the business has before it could be forced to cut the dividend.
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. For this reason, we're glad to see Bridge Bancorp's earnings per share have risen 17% per annum over the last five years.
The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. It looks like the Bridge Bancorp dividends are largely the same as they were ten years ago.
To Sum It Up
Is Bridge Bancorp worth buying for its dividend? Companies like Bridge Bancorp that are growing rapidly and paying out a low fraction of earnings, are usually reinvesting heavily in their 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. We think this is a pretty attractive combination, and would be interested in investigating Bridge Bancorp more closely.
While it's tempting to invest in Bridge Bancorp for the dividends alone, you should always be mindful of the risks involved. To that end, you should learn about the 2 warning signs we've spotted with Bridge Bancorp (including 1 which makes us a bit uncomfortable).
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.
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.
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