Be Sure To Check Out CB Financial Services, Inc. (NASDAQ:CBFV) Before It Goes Ex-Dividend
CB Financial Services, Inc. (NASDAQ:CBFV) stock is about to trade ex-dividend in 4 days. Typically, the ex-dividend date is one business day before the record date which is the date on which a company determines the shareholders eligible 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. This means that investors who purchase CB Financial Services' shares on or after the 14th of February will not receive the dividend, which will be paid on the 29th of February.
The company's next dividend payment will be US$0.25 per share, on the back of last year when the company paid a total of US$1.00 to shareholders. Based on the last year's worth of payments, CB Financial Services stock has a trailing yield of around 4.4% on the current share price of US$22.53. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. As a result, readers should always check whether CB Financial Services has been able to grow its dividends, or if the dividend might be cut.
See our latest analysis for CB Financial Services
Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. CB Financial Services paid out just 23% of its profit last year, which we think is conservatively low and leaves plenty of margin for unexpected circumstances.
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.
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. 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 CB Financial Services has grown its earnings rapidly, up 25% 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. CB Financial Services has delivered 1.8% dividend growth per year on average over the past 10 years. Earnings per share have been growing much quicker than dividends, potentially because CB Financial Services is keeping back more of its profits to grow the business.
To Sum It Up
Has CB Financial Services got what it takes to maintain its dividend payments? 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. This is one of the most attractive investment combinations under this analysis, as it can create substantial value for investors over the long run. Overall, CB Financial Services looks like a promising dividend stock in this analysis, and we think it would be worth investigating further.
In light of that, while CB Financial Services has an appealing dividend, it's worth knowing the risks involved with this stock. To help with this, we've discovered 1 warning sign for CB Financial Services that you should be aware of before investing in their shares.
A common investing mistake is buying the first interesting stock you see. Here you can find a full list of high-yield 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.
