Be Sure To Check Out Territorial Bancorp Inc. (NASDAQ:TBNK) Before It Goes Ex-Dividend
Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Territorial Bancorp Inc. (NASDAQ:TBNK) is about to trade ex-dividend in the next 4 days. The ex-dividend date is one business day before a company's record date, which is the date on which the company determines which shareholders are entitled to receive a dividend. The ex-dividend date is important as the process of settlement involves two full business days. So if you miss that date, you would not show up on the company's books on the record date. Thus, you can purchase Territorial Bancorp's shares before the 10th of August in order to receive the dividend, which the company will pay on the 25th of August.
The company's upcoming dividend is US$0.23 a share, following on from the last 12 months, when the company distributed a total of US$1.02 per share to shareholders. Based on the last year's worth of payments, Territorial Bancorp stock has a trailing yield of around 4.7% on the current share price of $21.92. If you buy this business for its dividend, you should have an idea of whether Territorial Bancorp's dividend is reliable and sustainable. So we need to investigate whether Territorial Bancorp can afford its dividend, and if the dividend could grow.
View our latest analysis for Territorial Bancorp
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. That's why it's good to see Territorial Bancorp paying out a modest 48% of its earnings.
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.
Have Earnings And Dividends Been Growing?
Stocks with flat earnings can still be attractive dividend payers, but it is important to be more conservative with your approach and demand a greater margin for safety when it comes to dividend sustainability. If earnings fall far enough, the company could be forced to cut its dividend. It's not encouraging to see that Territorial Bancorp's earnings are effectively flat over the past five years. Better than seeing them fall off a cliff, for sure, but the best dividend stocks grow their earnings meaningfully over the long run.
The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Since the start of our data, 10 years ago, Territorial Bancorp has lifted its dividend by approximately 11% a year on average.
The Bottom Line
Is Territorial Bancorp an attractive dividend stock, or better left on the shelf? Territorial Bancorp has seen its earnings per share stagnate in recent years, although the company reinvests more than half of its profits in the business, which could bode well for its future prospects. Overall, Territorial Bancorp looks like a promising dividend stock in this analysis, and we think it would be worth investigating further.
In light of that, while Territorial Bancorp has an appealing dividend, it's worth knowing the risks involved with this stock. Every company has risks, and we've spotted 2 warning signs for Territorial Bancorp (of which 1 makes us a bit uncomfortable!) you should know about.
If you're in the market for strong dividend payers, we recommend checking our selection of top dividend stocks.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.
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