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Is It Smart To Buy United Community Banks, Inc. (NASDAQ:UCBI) Before It Goes Ex-Dividend?

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  • UCBI
  • UCBIO

United Community Banks, Inc. (NASDAQ:UCBI) stock is about to trade ex-dividend in four days. If you purchase the stock on or after the 14th of December, you won't be eligible to receive this dividend, when it is paid on the 5th of January.

United Community Banks's upcoming dividend is US$0.18 a share, following on from the last 12 months, when the company distributed a total of US$0.72 per share to shareholders. Last year's total dividend payments show that United Community Banks has a trailing yield of 2.7% on the current share price of $26.495. If you buy this business for its dividend, you should have an idea of whether United Community Banks's dividend is reliable and sustainable. As a result, readers should always check whether United Community Banks has been able to grow its dividends, or if the dividend might be cut.

Check out our latest analysis for United Community Banks

Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. That's why it's good to see United Community Banks paying out a modest 39% of its earnings.

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?

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 fall far enough, the company could be forced to cut its dividend. Fortunately for readers, United Community Banks's earnings per share have been growing at 11% a year for the past five years.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. In the past seven years, United Community Banks has increased its dividend at approximately 29% a year on average. It's great to see earnings per share growing rapidly over several years, and dividends per share growing right along with it.

Final Takeaway

Is United Community Banks 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. Perhaps even more importantly - this can sometimes signal management is focused on the long term future of the business. Overall, United Community Banks looks like a promising dividend stock in this analysis, and we think it would be worth investigating further.

While it's tempting to invest in United Community Banks for the dividends alone, you should always be mindful of the risks involved. Every company has risks, and we've spotted 3 warning signs for United Community Banks you should know about.

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@simplywallst.com.