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Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Fidelity D & D Bancorp, Inc. (NASDAQ:FDBC) is about to trade ex-dividend in the next 4 days. You can purchase shares before the 14th of February in order to receive the dividend, which the company will pay on the 10th of March.
Fidelity D & D Bancorp's next dividend payment will be US$0.28 per share. Last year, in total, the company distributed US$1.12 to shareholders. Looking at the last 12 months of distributions, Fidelity D & D Bancorp has a trailing yield of approximately 1.9% on its current stock price of $57.46. 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 investigate whether Fidelity D & D Bancorp can afford its dividend, and if the dividend could grow.
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. That's why it's good to see Fidelity D & D Bancorp paying out a modest 35% of its earnings.
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 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 fall far enough, the company could be forced to cut its dividend. Fortunately for readers, Fidelity D & D Bancorp's earnings per share have been growing at 12% a year for the past five years.
The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Fidelity D & D Bancorp has delivered 5.3% dividend growth per year on average over the past ten years. Earnings per share have been growing much quicker than dividends, potentially because Fidelity D & D Bancorp is keeping back more of its profits to grow the business.
Final Takeaway
Is Fidelity D & D Bancorp an attractive dividend stock, or better left on the shelf? Typically, companies that are growing rapidly and paying out a low fraction of earnings are keeping the profits for reinvestment in the business. This strategy can add significant value to shareholders over the long term - as long as it's done without issuing too many new shares. Fidelity D & D Bancorp ticks a lot of boxes for us from a dividend perspective, and we think these characteristics should mark the company as deserving of further attention.