SB Financial Group, Inc. (NASDAQ:SBFG) stock is about to trade ex-dividend in four days. The ex-dividend date occurs one day before the record date which is the day on which shareholders need to be on the company's books in order to receive a dividend. It is important to be aware of the ex-dividend date because any trade on the stock needs to have been settled on or before the record date. Accordingly, SB Financial Group investors that purchase the stock on or after the 8th of November will not receive the dividend, which will be paid on the 22nd of November.
The company's upcoming dividend is US$0.145 a share, following on from the last 12 months, when the company distributed a total of US$0.56 per share to shareholders. Based on the last year's worth of payments, SB Financial Group has a trailing yield of 2.9% on the current stock price of US$19.53. If you buy this business for its dividend, you should have an idea of whether SB Financial Group's dividend is reliable and sustainable. So we need to check whether the dividend payments are covered, and if earnings are growing.
View our latest analysis for SB Financial Group
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. SB Financial Group paid out a comfortable 32% of its profit last year.
Generally speaking, the lower a company's payout ratios, the more resilient its dividend usually is.
Click here to see how much of its profit SB Financial Group paid out over the last 12 months.
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. With that in mind, we're not enthused to see that SB Financial Group's earnings per share have remained effectively flat over the past five years. It's better than seeing them drop, certainly, but over the long term, all of the best dividend stocks are able to meaningfully grow their earnings per share.
The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. In the last 10 years, SB Financial Group has lifted its dividend by approximately 15% a year on average.
Is SB Financial Group worth buying for its dividend? SB Financial Group has seen its earnings per share stagnate in recent years, although the company reinvests more than half of its profits in the business, which could bode well for its future prospects. In summary, SB Financial Group appears to have some promise as a dividend stock, and we'd suggest taking a closer look at it.