Village Bank and Trust Financial Corp. (NASDAQ:VBFC) Looks Like A Good Stock, And It's Going Ex-Dividend Soon
Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Village Bank and Trust Financial Corp. (NASDAQ:VBFC) is about to trade ex-dividend in the next four days. The ex-dividend date occurs one day before the record date which is the day on which shareholders need to be on the company's books in order to receive a dividend. The ex-dividend date is an important date to be aware of as any purchase of the stock made on or after this date might mean a late settlement that doesn't show on the record date. Thus, you can purchase Village Bank and Trust Financial's shares before the 7th of September in order to receive the dividend, which the company will pay on the 15th of September.
The company's next dividend payment will be US$0.16 per share, and in the last 12 months, the company paid a total of US$0.64 per share. Looking at the last 12 months of distributions, Village Bank and Trust Financial has a trailing yield of approximately 1.4% on its current stock price of $45. If you buy this business for its dividend, you should have an idea of whether Village Bank and Trust Financial's dividend is reliable and sustainable. So we need to investigate whether Village Bank and Trust Financial can afford its dividend, and if the dividend could grow.
See our latest analysis for Village Bank and Trust Financial
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Village Bank and Trust Financial has a low and conservative payout ratio of just 13% of its income after tax.
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.
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 business enters a downturn and the dividend is cut, the company could see its value fall precipitously. That's why it's comforting to see Village Bank and Trust Financial's earnings have been skyrocketing, up 30% per annum for the past 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 two years, Village Bank and Trust Financial has increased its dividend at approximately 6.9% a year on average. We're glad to see dividends rising alongside earnings over a number of years, which may be a sign the company intends to share the growth with shareholders.
Final Takeaway
Has Village Bank and Trust Financial got what it takes to maintain its dividend payments? Companies like Village Bank and Trust Financial 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. Overall, Village Bank and Trust Financial looks like a promising dividend stock in this analysis, and we think it would be worth investigating further.
With that in mind, a critical part of thorough stock research is being aware of any risks that stock currently faces. Case in point: We've spotted 1 warning sign for Village Bank and Trust Financial you should be aware of.
Generally, we wouldn't recommend just buying the first dividend stock you see. Here's a curated list of interesting stocks that are strong dividend payers.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.
