U.S. Bancorp (NYSE:USB) Will Pay A US$0.42 Dividend In Four Days

Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see U.S. Bancorp (NYSE:USB) is about to trade ex-dividend in the next four days. Ex-dividend means that investors that purchase the stock on or after the 29th of September will not receive this dividend, which will be paid on the 15th of October.

U.S. Bancorp's next dividend payment will be US$0.42 per share, and in the last 12 months, the company paid a total of US$1.68 per share. Calculating the last year's worth of payments shows that U.S. Bancorp has a trailing yield of 4.9% on the current share price of $34.5. If you buy this business for its dividend, you should have an idea of whether U.S. Bancorp's dividend is reliable and sustainable. As a result, readers should always check whether U.S. Bancorp has been able to grow its dividends, or if the dividend might be cut.

See our latest analysis for U.S. Bancorp

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. U.S. Bancorp paid out more than half (52%) of its earnings last year, which is a regular payout ratio for most companies.

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 the company's payout ratio, plus analyst estimates of its future dividends.

Have Earnings And Dividends Been Growing?

Stocks with flat earnings can still be attractive dividend payers, but it is important to be more conservative with your approach and demand a greater margin for safety when it comes to dividend sustainability. 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 not encouraging to see that U.S. Bancorp's earnings are effectively flat over the past five years. Better than seeing them fall off a cliff, for sure, but the best dividend stocks grow their earnings meaningfully over the long run.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. In the past 10 years, U.S. Bancorp has increased its dividend at approximately 24% a year on average.

Final Takeaway

From a dividend perspective, should investors buy or avoid U.S. Bancorp? U.S. Bancorp's earnings are effectively flat over recent years, even as the company pays out more than half of its earnings to shareholders as dividends. In sum this is a middling combination, and we find it hard to get excited about the company from a dividend perspective.

Ever wonder what the future holds for U.S. Bancorp? See what the 18 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.

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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