There's A Lot To Like About Riverview Bancorp's (NASDAQ:RVSB) Upcoming US$0.05 Dividend

Riverview Bancorp, Inc. (NASDAQ:RVSB) is about to trade ex-dividend in the next four days. If you purchase the stock on or after the 7th of October, you won't be eligible to receive this dividend, when it is paid on the 20th of October.

Riverview Bancorp's upcoming dividend is US$0.05 a share, following on from the last 12 months, when the company distributed a total of US$0.20 per share to shareholders. Looking at the last 12 months of distributions, Riverview Bancorp has a trailing yield of approximately 4.8% on its current stock price of $4.21. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. As a result, readers should always check whether Riverview Bancorp has been able to grow its dividends, or if the dividend might be cut.

See our latest analysis for Riverview Bancorp

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Riverview Bancorp paid out a comfortable 37% of its profit last year.

When a company paid out less in dividends than it earned in profit, this generally suggests its dividend is affordable. The lower the % of its profit that it pays out, the greater the margin of safety for the dividend if the business enters a downturn.

Click here to see how much of its profit Riverview Bancorp 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. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. It's encouraging to see Riverview Bancorp has grown its earnings rapidly, up 22% 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. Riverview Bancorp has delivered an average of 28% per year annual increase in its dividend, based on the past six years of dividend payments. Both per-share earnings and dividends have both been growing rapidly in recent times, which is great to see.

The Bottom Line

Should investors buy Riverview Bancorp for the upcoming dividend? Companies like Riverview Bancorp that are growing rapidly and paying out a low fraction of earnings, are usually reinvesting heavily in their 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, Riverview Bancorp looks like a promising dividend stock in this analysis, and we think it would be worth investigating further.

While it's tempting to invest in Riverview Bancorp for the dividends alone, you should always be mindful of the risks involved. To that end, you should learn about the 4 warning signs we've spotted with Riverview Bancorp (including 1 which makes us a bit uncomfortable).

A common investment mistake is buying the first interesting stock you see. Here you can find a list of promising dividend stocks with a greater than 2% yield and an upcoming dividend.

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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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