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UMB Financial Corporation (NASDAQ:UMBF) Looks Interesting, And It's About To Pay A Dividend

Simply Wall St
·3 min read

It looks like UMB Financial Corporation (NASDAQ:UMBF) is about to go ex-dividend in the next 4 days. You can purchase shares before the 9th of September in order to receive the dividend, which the company will pay on the 1st of October.

UMB Financial's next dividend payment will be US$0.31 per share, on the back of last year when the company paid a total of US$1.24 to shareholders. Calculating the last year's worth of payments shows that UMB Financial has a trailing yield of 2.3% on the current share price of $54.49. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. So we need to check whether the dividend payments are covered, and if earnings are growing.

Check out our latest analysis for UMB Financial

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. That's why it's good to see UMB Financial paying out a modest 32% 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.

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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. With that in mind, we're encouraged by the steady growth at UMB Financial, with earnings per share up 7.3% on average 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. In the past 10 years, UMB Financial has increased its dividend at approximately 5.3% a year on average. It's encouraging to see the company lifting dividends while earnings are growing, suggesting at least some corporate interest in rewarding shareholders.

Final Takeaway

Is UMB Financial worth buying for its dividend? UMB Financial has seen its earnings per share grow slowly in recent years, and the company reinvests more than half of its profits in the business, which generally bodes well for its future prospects. In summary, UMB Financial appears to have some promise as a dividend stock, and we'd suggest taking a closer look at it.

In light of that, while UMB Financial has an appealing dividend, it's worth knowing the risks involved with this stock. Case in point: We've spotted 1 warning sign for UMB Financial you should be aware of.

A common investment mistake is buying the first interesting stock you see. Here you can find a list of promising 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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