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Be Sure To Check Out United Security Bancshares (NASDAQ:UBFO) Before It Goes Ex-Dividend

Simply Wall St
·3 min read

United Security Bancshares (NASDAQ:UBFO) is about to trade ex-dividend in the next four days. You will need to purchase shares before the 5th of October to receive the dividend, which will be paid on the 16th of October.

United Security Bancshares's upcoming dividend is US$0.11 a share, following on from the last 12 months, when the company distributed a total of US$0.44 per share to shareholders. Calculating the last year's worth of payments shows that United Security Bancshares has a trailing yield of 7.2% on the current share price of $6.13. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. So we need to investigate whether United Security Bancshares can afford its dividend, and if the dividend could grow.

See our latest analysis for United Security Bancshares

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. United Security Bancshares paid out more than half (63%) of its earnings last year, which is a regular payout ratio for most companies.

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 how much of its profit United Security Bancshares paid out over the last 12 months.

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 decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. For this reason, we're glad to see United Security Bancshares's earnings per share have risen 14% per annum over the last five years.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. In the last three years, United Security Bancshares has lifted its dividend by approximately 30% a year on average. Both per-share earnings and dividends have both been growing rapidly in recent times, which is great to see.

The Bottom Line

Has United Security Bancshares got what it takes to maintain its dividend payments? Earnings per share are growing at an attractive rate, and United Security Bancshares is paying out a bit over half its profits. In summary, United Security Bancshares appears to have some promise as a dividend stock, and we'd suggest taking a closer look at it.

On that note, you'll want to research what risks United Security Bancshares is facing. In terms of investment risks, we've identified 1 warning sign with United Security Bancshares and understanding them should be part of your investment process.

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.