U.S. markets close in 3 hours 19 minutes
  • S&P 500

    3,895.12
    -6.70 (-0.17%)
     
  • Dow 30

    31,572.38
    +36.87 (+0.12%)
     
  • Nasdaq

    13,495.03
    -93.80 (-0.69%)
     
  • Russell 2000

    2,245.80
    -29.52 (-1.30%)
     
  • Crude Oil

    60.92
    +0.28 (+0.46%)
     
  • Gold

    1,735.60
    +12.60 (+0.73%)
     
  • Silver

    26.83
    +0.16 (+0.59%)
     
  • EUR/USD

    1.2085
    +0.0025 (+0.21%)
     
  • 10-Yr Bond

    1.4100
    -0.0360 (-2.49%)
     
  • GBP/USD

    1.3969
    +0.0048 (+0.35%)
     
  • USD/JPY

    106.7260
    -0.0040 (-0.00%)
     
  • BTC-USD

    47,843.14
    -1,220.99 (-2.49%)
     
  • CMC Crypto 200

    959.28
    -27.37 (-2.77%)
     
  • FTSE 100

    6,613.75
    +25.22 (+0.38%)
     
  • Nikkei 225

    29,408.17
    -255.33 (-0.86%)
     

Is It Smart To Buy Central Valley Community Bancorp (NASDAQ:CVCY) Before It Goes Ex-Dividend?

  • Oops!
    Something went wrong.
    Please try again later.
Simply Wall St
·3 min read
  • Oops!
    Something went wrong.
    Please try again later.

It looks like Central Valley Community Bancorp (NASDAQ:CVCY) is about to go ex-dividend in the next four days. You will need to purchase shares before the 11th of February to receive the dividend, which will be paid on the 26th of February.

Central Valley Community Bancorp's next dividend payment will be US$0.11 per share, on the back of last year when the company paid a total of US$0.44 to shareholders. Calculating the last year's worth of payments shows that Central Valley Community Bancorp has a trailing yield of 2.6% on the current share price of $17.14. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. We need to see whether the dividend is covered by earnings and if it's growing.

View our latest analysis for Central Valley Community Bancorp

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. Fortunately Central Valley Community Bancorp's payout ratio is modest, at just 27% of profit.

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.

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

historic-dividend
historic-dividend

Have Earnings And Dividends Been Growing?

Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. 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, Central Valley Community Bancorp's earnings per share have been growing at 10% a year for the past five years.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. In the last eight years, Central Valley Community Bancorp has lifted its dividend by approximately 10% a year on average. It's exciting to see that both earnings and dividends per share have grown rapidly over the past few years.

The Bottom Line

From a dividend perspective, should investors buy or avoid Central Valley Community Bancorp? Companies like Central Valley Community Bancorp that are growing rapidly and paying out a low fraction of earnings, are usually reinvesting heavily in their 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. Central Valley Community 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.

While it's tempting to invest in Central Valley Community Bancorp for the dividends alone, you should always be mindful of the risks involved. We've identified 3 warning signs with Central Valley Community Bancorp (at least 1 which is a bit concerning), and understanding these should be part of your investment process.

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.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.