Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Middlefield Banc Corp. (NASDAQ:MBCN) is about to trade ex-dividend in the next 4 days. You can purchase shares before the 3rd of March in order to receive the dividend, which the company will pay on the 13th of March.
Middlefield Banc's upcoming dividend is US$0.15 a share, following on from the last 12 months, when the company distributed a total of US$0.60 per share to shareholders. Looking at the last 12 months of distributions, Middlefield Banc has a trailing yield of approximately 2.4% on its current stock price of $24.56. If you buy this business for its dividend, you should have an idea of whether Middlefield Banc's dividend is reliable and sustainable. As a result, readers should always check whether Middlefield Banc has been able to grow its dividends, or if the dividend might be cut.
Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. Middlefield Banc paid out a comfortable 29% 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.
Have Earnings And Dividends Been Growing?
Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. With that in mind, we're encouraged by the steady growth at Middlefield Banc, with earnings per share up 2.2% on average over the last five years.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. In the past ten years, Middlefield Banc has increased its dividend at approximately 1.4% a year on average.
From a dividend perspective, should investors buy or avoid Middlefield Banc? 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. Middlefield Banc 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.
Curious what other investors think of Middlefield Banc? See what analysts 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.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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.
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