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It looks like CB Financial Services, Inc. (NASDAQ:CBFV) is about to go ex-dividend in the next 4 days. Typically, the ex-dividend date is one business day before the record date which is the date on which a company determines the shareholders eligible 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. Thus, you can purchase CB Financial Services' shares before the 14th of February in order to receive the dividend, which the company will pay on the 28th of February.
The company's next dividend payment will be US$0.25 per share, on the back of last year when the company paid a total of US$1.00 to shareholders. Based on the last year's worth of payments, CB Financial Services has a trailing yield of 3.2% on the current stock price of US$31.25. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. We need to see whether the dividend is covered by earnings and if it's growing.
See our latest analysis for CB Financial Services
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. That's why it's good to see CB Financial Services paying out a modest 41% of its earnings.
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?
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. If earnings fall far enough, the company could be forced to cut its dividend. It's not encouraging to see that CB Financial Services's earnings are 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, CB Financial Services has lifted its dividend by approximately 1.8% a year on average.
Final Takeaway
From a dividend perspective, should investors buy or avoid CB Financial Services? CB Financial Services's earnings per share have not grown at all in recent years, although we like that it is paying out a low percentage of its earnings. It doesn't appear an outstanding opportunity, but could be worth a closer look.