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Readers hoping to buy Bank OZK (NASDAQ:OZK) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. This means that investors who purchase shares on or after the 8th of October will not receive the dividend, which will be paid on the 19th of October.
Bank OZK's upcoming dividend is US$0.28 a share, following on from the last 12 months, when the company distributed a total of US$1.09 per share to shareholders. Based on the last year's worth of payments, Bank OZK stock has a trailing yield of around 5.0% on the current share price of $22.075. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. We need to see whether the dividend is covered by earnings and if it's growing.
View our latest analysis for Bank OZK
Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. That's why it's good to see Bank OZK paying out a modest 49% of its earnings.
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?
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 earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. This is why it's a relief to see Bank OZK earnings per share are up 6.2% per annum over the last five years.
Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Bank OZK has delivered 24% dividend growth per year on average over the past 10 years. We're glad to see dividends rising alongside earnings over a number of years, which may be a sign the company intends to share the growth with shareholders.
To Sum It Up
Is Bank OZK an attractive dividend stock, or better left on the shelf? Bank OZK has seen its earnings per share grow slowly in recent years, and the company reinvests more than half of its profits in the business, which generally bodes well for its future prospects. In summary, Bank OZK appears to have some promise as a dividend stock, and we'd suggest taking a closer look at it.