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Is It Smart To Buy Hanmi Financial Corporation (NASDAQ:HAFC) Before It Goes Ex-Dividend?

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·3 min read
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Hanmi Financial Corporation (NASDAQ:HAFC) stock is about to trade ex-dividend in three days. Investors can purchase shares before the 7th of May in order to be eligible for this dividend, which will be paid on the 27th of May.

Hanmi Financial's next dividend payment will be US$0.12 per share, and in the last 12 months, the company paid a total of US$0.40 per share. Looking at the last 12 months of distributions, Hanmi Financial has a trailing yield of approximately 2.0% on its current stock price of $20.3. 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! That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

Check out our latest analysis for Hanmi Financial

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Hanmi Financial has a low and conservative payout ratio of just 21% 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.

historic-dividend
historic-dividend

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 earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. With that in mind, we're not enthused to see that Hanmi Financial's earnings per share have remained effectively flat over the past five years. It's better than seeing them drop, certainly, but over the long term, all of the best dividend stocks are able to meaningfully grow their earnings per share.

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, Hanmi Financial has lifted its dividend by approximately 4.6% a year on average.

To Sum It Up

Is Hanmi Financial worth buying for its dividend? Earnings per share have been flat in recent years, although Hanmi Financial reinvests more than half its earnings in the business, which could suggest there are some growth projects that have not yet reached fruition. Overall, Hanmi Financial looks like a promising dividend stock in this analysis, and we think it would be worth investigating further.

So while Hanmi Financial looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. For example, we've found 3 warning signs for Hanmi Financial (1 is a bit concerning!) that deserve your attention before investing in the shares.

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.