In This Article:
It looks like Fidelity D & D Bancorp, Inc. (NASDAQ:FDBC) is about to go ex-dividend in the next 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. The ex-dividend date is important as the process of settlement involves two full business days. So if you miss that date, you would not show up on the company's books on the record date. Meaning, you will need to purchase Fidelity D & D Bancorp's shares before the 15th of February to receive the dividend, which will be paid on the 8th of March.
The company's next dividend payment will be US$0.38 per share, and in the last 12 months, the company paid a total of US$1.52 per share. Based on the last year's worth of payments, Fidelity D & D Bancorp stock has a trailing yield of around 3.2% on the current share price of US$47.22. If you buy this business for its dividend, you should have an idea of whether Fidelity D & D Bancorp's dividend is reliable and sustainable. So we need to check whether the dividend payments are covered, and if earnings are growing.
See our latest analysis for Fidelity D & D Bancorp
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Fidelity D & D Bancorp paid out a comfortable 45% 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 Fidelity D & D Bancorp paid out over the last 12 months.
Have Earnings And Dividends Been Growing?
Companies that aren't growing their earnings can still be valuable, but it is even more important to assess the sustainability of the dividend if it looks like the company will struggle to grow. 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 Fidelity D & D Bancorp's earnings are effectively flat over the past five years. We'd take that over an earnings decline any day, but in the long run, the best dividend stocks all grow their earnings per share.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. In the last 10 years, Fidelity D & D Bancorp has lifted its dividend by approximately 8.6% a year on average.
To Sum It Up
Should investors buy Fidelity D & D Bancorp for the upcoming dividend? Earnings per share have been flat in recent years, although Fidelity D & D Bancorp reinvests more than half its earnings in the business, which could suggest there are some growth projects that have not yet reached fruition. In summary, Fidelity D & D Bancorp appears to have some promise as a dividend stock, and we'd suggest taking a closer look at it.