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There's A Lot To Like About Cortland Bancorp's (NASDAQ:CLDB) Upcoming US$0.14 Dividend

Simply Wall St
·3 min read

Readers hoping to buy Cortland Bancorp (NASDAQ:CLDB) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. You can purchase shares before the 6th of November in order to receive the dividend, which the company will pay on the 1st of December.

Cortland Bancorp's next dividend payment will be US$0.14 per share. Last year, in total, the company distributed US$0.61 to shareholders. Based on the last year's worth of payments, Cortland Bancorp has a trailing yield of 4.1% on the current stock price of $14.98. 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.

Check out our latest analysis for Cortland 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 Cortland Bancorp paying out a modest 31% of its earnings.

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 Cortland Bancorp paid out over the last 12 months.

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historic-dividend

Have Earnings And Dividends Been Growing?

Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. If earnings fall far enough, the company could be forced to cut its dividend. For this reason, we're glad to see Cortland Bancorp's earnings per share have risen 15% per annum over the last five years.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Since the start of our data, eight years ago, Cortland Bancorp has lifted its dividend by approximately 23% 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.

The Bottom Line

Is Cortland Bancorp 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. This strategy can add significant value to shareholders over the long term - as long as it's done without issuing too many new shares. Cortland Bancorp ticks a lot of boxes for us from a dividend perspective, and we think these characteristics should mark the company as deserving of further attention.

So while Cortland Bancorp looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. For example - Cortland Bancorp has 2 warning signs we think you should be aware of.

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.

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