Southern States Bancshares, Inc. (NASDAQ:SSBK) Passed Our Checks, And It's About To Pay A US$0.09 Dividend
Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Southern States Bancshares, Inc. (NASDAQ:SSBK) is about to trade ex-dividend in the next four days. The ex-dividend date occurs one day before the record date which is the day on which shareholders need to be on the company's books in order to receive a dividend. The ex-dividend date is of consequence because whenever a stock is bought or sold, the trade takes at least two business day to settle. Meaning, you will need to purchase Southern States Bancshares' shares before the 2nd of November to receive the dividend, which will be paid on the 17th of November.
The company's next dividend payment will be US$0.09 per share, on the back of last year when the company paid a total of US$0.36 to shareholders. Calculating the last year's worth of payments shows that Southern States Bancshares has a trailing yield of 1.6% on the current share price of $22.8. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. We need to see whether the dividend is covered by earnings and if it's growing.
View our latest analysis for Southern States Bancshares
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. Southern States Bancshares paid out just 9.4% of its profit last year, which we think is conservatively low and leaves plenty of margin for unexpected circumstances.
Generally speaking, the lower a company's payout ratios, the more resilient its dividend usually is.
Click here to see how much of its profit Southern States Bancshares paid out over the last 12 months.
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. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. It's encouraging to see Southern States Bancshares has grown its earnings rapidly, up 26% 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. It looks like the Southern States Bancshares dividends are largely the same as they were two years ago.
The Bottom Line
Should investors buy Southern States Bancshares for the upcoming dividend? When companies are growing rapidly and retaining a majority of the profits within the business, it's usually a sign that reinvesting earnings creates more value than paying dividends to shareholders. Perhaps even more importantly - this can sometimes signal management is focused on the long term future of the business. Overall, Southern States Bancshares 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 Southern States Bancshares for the dividends alone, you should always be mindful of the risks involved. To help with this, we've discovered 1 warning sign for Southern States Bancshares that you should be aware of before investing in their shares.
If you're in the market for strong dividend payers, we recommend checking our selection of top dividend stocks.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.
