Is It Smart To Buy United Security Bancshares (NASDAQ:UBFO) Before It Goes Ex-Dividend?
It looks like United Security Bancshares (NASDAQ:UBFO) is about to go ex-dividend in the next 3 days. You will need to purchase shares before the 3rd of April to receive the dividend, which will be paid on the 15th of April.
United Security Bancshares's upcoming dividend is US$0.11 a share, following on from the last 12 months, when the company distributed a total of US$0.44 per share to shareholders. Based on the last year's worth of payments, United Security Bancshares stock has a trailing yield of around 6.9% on the current share price of $6.4. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! So we need to investigate whether United Security Bancshares can afford its dividend, and if the dividend could grow.
View our latest analysis for United Security Bancshares
Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. United Security Bancshares paid out a comfortable 49% of its profit last year.
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.
Click here to see how much of its profit United Security Bancshares paid out over the last 12 months.
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. If earnings fall far enough, the company could be forced to cut its dividend. Fortunately for readers, United Security Bancshares's earnings per share have been growing at 19% a year 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. United Security Bancshares has delivered 30% dividend growth per year on average over the past three years. It's great to see earnings per share growing rapidly over several years, and dividends per share growing right along with it.
The Bottom Line
From a dividend perspective, should investors buy or avoid United Security Bancshares? Companies like United Security Bancshares that are growing rapidly and paying out a low fraction of earnings, are usually reinvesting heavily in their business. Perhaps even more importantly - this can sometimes signal management is focused on the long term future of the business. Overall, United Security Bancshares looks like a promising dividend stock in this analysis, and we think it would be worth investigating further.
In light of that, while United Security Bancshares has an appealing dividend, it's worth knowing the risks involved with this stock. Case in point: We've spotted 2 warning signs for United Security Bancshares 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.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.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.
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. Thank you for reading.
