A large part of investment returns can be generated by dividend-paying stock given their role in compounding returns over time. In the past 10 years United Security Bancshares (NASDAQ:UBFO) has returned an average of 1.00% per year to investors in the form of dividend payouts. Does United Security Bancshares tick all the boxes of a great dividend stock? Below, I’ll take you through my analysis. View out our latest analysis for United Security Bancshares
5 questions I ask before picking a dividend stock
If you are a dividend investor, you should always assess these five key metrics:
- Is its annual yield among the top 25% of dividend-paying companies?
- Does it consistently pay out dividends without missing a payment of significantly cutting payout?
- Has the amount of dividend per share grown over the past?
- Is its earnings sufficient to payout dividend at the current rate?
- Will it have the ability to keep paying its dividends going forward?
How does United Security Bancshares fare?
United Security Bancshares has a trailing twelve-month payout ratio of 40.44%, which means that the dividend is covered by earnings. Furthermore, analysts have not forecasted a dividends per share for the future, which makes it hard to determine the yield shareholders should expect, and whether the current payout is sustainable, moving forward.
Reliablity is an important factor for dividend stocks, particularly for income investors who want a strong track record of payment and a positive outlook for future payout. Not only have dividend payouts from United Security Bancshares fallen over the past 10 years, it has also been highly volatile during this time, with drops of over 25% in some years. This means that dividend hunters should probably steer clear of the stock, at least for now until the track record improves.
Relative to peers, United Security Bancshares has a yield of 3.27%, which is on the low-side for Banks stocks.
Now you know to keep in mind the reason why investors should be careful investing in United Security Bancshares for the dividend. But if you are not exclusively a dividend investor, the stock could still be an interesting investment opportunity. Given that this is purely a dividend analysis, I recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. Below, I’ve compiled three fundamental aspects you should further research:
- Future Outlook: What are well-informed industry analysts predicting for UBFO’s future growth? Take a look at our free research report of analyst consensus for UBFO’s outlook.
- Historical Performance: What has UBFO’s returns been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
- Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.