Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Zions Bancorporation, National Association (NASDAQ:ZION) is about to trade ex-dividend in the next 4 days. Investors can purchase shares before the 14th of August in order to be eligible for this dividend, which will be paid on the 22nd of August.
Zions Bancorporation National Association's next dividend payment will be US$0.34 per share, on the back of last year when the company paid a total of US$1.36 to shareholders. Looking at the last 12 months of distributions, Zions Bancorporation National Association has a trailing yield of approximately 3.2% on its current stock price of $42.13. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. We need to see whether the dividend is covered by earnings and if it's growing.
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. Fortunately Zions Bancorporation National Association's payout ratio is modest, at just 27% 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 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 Zions Bancorporation National Association's earnings have been skyrocketing, up 23% per annum for the past five years.
The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. In the past 10 years, Zions Bancorporation National Association has increased its dividend at approximately 0.6% a year on average. Earnings per share have been growing much quicker than dividends, potentially because Zions Bancorporation National Association is keeping back more of its profits to grow the business.
Is Zions Bancorporation National Association worth buying for its dividend? Typically, companies that are growing rapidly and paying out a low fraction of earnings are keeping the profits for reinvestment in the 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, Zions Bancorporation National Association looks like a promising dividend stock in this analysis, and we think it would be worth investigating further.
Wondering what the future holds for Zions Bancorporation National Association? See what the 20 analysts we track are forecasting, with this visualisation of its historical and future estimated earnings and cash flow
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.
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.
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.