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United Bancorp, Inc. (NASDAQ:UBCP) Passed Our Checks, And It's About To Pay A US$0.14 Dividend

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Simply Wall St
·3 min read
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United Bancorp, Inc. (NASDAQ:UBCP) stock is about to trade ex-dividend in 4 days time. You can purchase shares before the 9th of March in order to receive the dividend, which the company will pay on the 20th of March.

United Bancorp's next dividend payment will be US$0.14 per share, and in the last 12 months, the company paid a total of US$0.56 per share. Looking at the last 12 months of distributions, United Bancorp has a trailing yield of approximately 4.2% on its current stock price of $13.6152. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

Check out our latest analysis for United Bancorp

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Fortunately United Bancorp's payout ratio is modest, at just 44% of profit.

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 Bancorp paid out over the last 12 months.

NasdaqCM:UBCP Historical Dividend Yield, March 4th 2020
NasdaqCM:UBCP Historical Dividend Yield, March 4th 2020

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. For this reason, we're glad to see United Bancorp's earnings per share have risen 18% 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. United Bancorp's dividend payments are effectively flat on where they were ten years ago.

The Bottom Line

Is United Bancorp an attractive dividend stock, or better left on the shelf? Companies like United Bancorp that are growing rapidly and paying out a low fraction of earnings, are usually reinvesting heavily in their 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. In summary, United Bancorp appears to have some promise as a dividend stock, and we'd suggest taking a closer look at it.

While it's tempting to invest in United Bancorp for the dividends alone, you should always be mindful of the risks involved. In terms of investment risks, we've identified 3 warning signs with United Bancorp and understanding them should be part of your investment process.

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.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.