Webster Financial Corporation (NYSE:WBS) Stock Goes Ex-Dividend In Just Four Days
It looks like Webster Financial Corporation (NYSE:WBS) is about to go ex-dividend in the next four days. You can purchase shares before the 9th of November in order to receive the dividend, which the company will pay on the 24th of November.
Webster Financial's next dividend payment will be US$0.40 per share, on the back of last year when the company paid a total of US$1.60 to shareholders. Looking at the last 12 months of distributions, Webster Financial has a trailing yield of approximately 4.7% on its current stock price of $33.74. If you buy this business for its dividend, you should have an idea of whether Webster Financial's dividend is reliable and sustainable. As a result, readers should always check whether Webster Financial has been able to grow its dividends, or if the dividend might be cut.
Check out our latest analysis for Webster Financial
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. Webster Financial is paying out an acceptable 60% of its profit, a common payout level among most companies.
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.
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. 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 Webster Financial, with earnings per share up 5.0% on average over the last five years.
The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Webster Financial has delivered an average of 45% per year annual increase in its dividend, based on the past 10 years of dividend payments. It's encouraging to see the company lifting dividends while earnings are growing, suggesting at least some corporate interest in rewarding shareholders.
To Sum It Up
Has Webster Financial got what it takes to maintain its dividend payments? Webster Financial has been generating some growth in earnings per share while paying out more than half of its earnings to shareholders in the form of dividends. It might be worth researching if the company is reinvesting in growth projects that could grow earnings and dividends in the future, but for now we're on the fence about its dividend prospects.
With that being said, if dividends aren't your biggest concern with Webster Financial, you should know about the other risks facing this business. Case in point: We've spotted 1 warning sign for Webster Financial you should be aware of.
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.
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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