Western Alliance Bancorporation (NYSE:WAL) is about to trade ex-dividend in the next 4 days. If you purchase the stock on or after the 14th of November, you won't be eligible to receive this dividend, when it is paid on the 29th of November.
Western Alliance Bancorporation's next dividend payment will be US$0.3 per share. Last year, in total, the company distributed US$1.0 to shareholders. Based on the last year's worth of payments, Western Alliance Bancorporation has a trailing yield of 1.9% on the current stock price of $52.57. If you buy this business for its dividend, you should have an idea of whether Western Alliance Bancorporation's dividend is reliable and sustainable. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.
Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. Western Alliance Bancorporation has a low and conservative payout ratio of just 5.3% of its income after tax.
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.
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. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. That's why it's comforting to see Western Alliance Bancorporation's earnings have been skyrocketing, up 29% per annum for the past five years.
This is Western Alliance Bancorporation's first year of paying a dividend, which is exciting for shareholders - but it does mean there's no dividend history to examine.
To Sum It Up
Is Western Alliance Bancorporation 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. Perhaps even more importantly - this can sometimes signal management is focused on the long term future of the business. Overall, Western Alliance Bancorporation looks like a promising dividend stock in this analysis, and we think it would be worth investigating further.
Ever wonder what the future holds for Western Alliance Bancorporation? See what the ten analysts we track are forecasting, with this visualisation of its historical and future estimated earnings and cash flow
We wouldn't recommend just buying the first dividend stock you see, though. Here's a list of interesting dividend stocks with a greater than 2% yield and an upcoming dividend.
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If you spot an error that warrants correction, please contact the editor at email@example.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.