TrustCo Bank Corp NY (NASDAQ:TRST) stock is about to trade ex-dividend in 3 days time. You will need to purchase shares before the 5th of September to receive the dividend, which will be paid on the 1st of October.
TrustCo Bank Corp NY's next dividend payment will be US$0.068 per share, on the back of last year when the company paid a total of US$0.27 to shareholders. Calculating the last year's worth of payments shows that TrustCo Bank Corp NY has a trailing yield of 3.6% on the current share price of $7.67. If you buy this business for its dividend, you should have an idea of whether TrustCo Bank Corp NY's dividend is reliable and sustainable. So we need to investigate whether TrustCo Bank Corp NY can afford its dividend, and if the dividend could grow.
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Fortunately TrustCo Bank Corp NY's payout ratio is modest, at just 44% of profit.
Generally speaking, the lower a company's payout ratios, the more resilient its dividend usually is.
Have Earnings And Dividends Been Growing?
Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. With that in mind, we're encouraged by the steady growth at TrustCo Bank Corp NY, with earnings per share up 8.2% 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. TrustCo Bank Corp NY's dividend payments per share have declined at 4.7% per year on average over the past 10 years, which is uninspiring. TrustCo Bank Corp NY is a rare case where dividends have been decreasing at the same time as earnings per share have been improving. It's unusual to see, and could point to unstable conditions in the core business, or more rarely an intensified focus on reinvesting profits.
The Bottom Line
Should investors buy TrustCo Bank Corp NY for the upcoming dividend? It has been growing its earnings per share somewhat in recent years, although it reinvests more than half its earnings in the business, which could suggest there are some growth projects that have not yet reached fruition. TrustCo Bank Corp NY ticks a lot of boxes for us from a dividend perspective, and we think these characteristics should mark the company as deserving of further attention.
Want to learn more about TrustCo Bank Corp NY? Here's a visualisation of its historical rate of revenue and earnings growth.
If you're in the market for dividend stocks, we recommend checking our list of top 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.