March 29, 2024

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DCOM) For Its Upcoming Dividend

Dime Community Bancshares, Inc. (NASDAQ:DCOM) is about to trade ex-dividend in the next four days. If you purchase the stock on or after the 5th of August, you won’t be eligible to receive this dividend, when it is paid on the 13th of August.

Dime Community Bancshares’s next dividend payment will be US$0.14 per share. Last year, in total, the company distributed US$0.56 to shareholders. Looking at the last 12 months of distributions, Dime Community Bancshares has a trailing yield of approximately 4.7% on its current stock price of $11.87. If you buy this business for its dividend, you should have an idea of whether Dime Community Bancshares’s dividend is reliable and sustainable. We need to see whether the dividend is covered by earnings and if it’s growing.

See our latest analysis for Dime Community 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. Dime Community Bancshares is paying out an acceptable 61% of its profit, a common payout level among most companies.

Generally speaking, the lower a company’s payout ratios, the more resilient its dividend usually is.

Click here to see the company’s payout ratio, plus analyst estimates of its future dividends.

Have Earnings And Dividends Been Growing?

Businesses with shrinking earnings are tricky from a dividend perspective. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. Readers will understand then, why we’re concerned to see Dime Community Bancshares’s earnings per share have dropped 5.6% a year over the past five years. When earnings per share fall, the maximum amount of dividends that can be paid also falls.

Another key way to measure a company’s dividend prospects is by measuring its historical rate of dividend growth. Dime Community Bancshares’s dividend payments are effectively flat on where they were 10 years ago. When earnings are declining yet the dividends are flat, typically the company is either paying out a higher portion of its earnings, or paying out of cash or debt on the balance sheet, neither of which is ideal.

The Bottom Line

Should investors buy Dime Community Bancshares for the upcoming dividend? Earnings per share have been declining and the company is paying out more than half its profits to shareholders; not an enticing combination. This is not an overtly appealing combination of characteristics, and we’re just not that interested in this company’s dividend.

So if you’re still interested in Dime Community Bancshares despite it’s poor dividend qualities, you should be well informed on some of the risks facing this stock. Our analysis shows 2 warning signs for Dime Community Bancshares and you should be aware of them before buying any shares.

If you’re in the market for dividend stocks, we recommend checking our list of top 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.

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