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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 Riverview Bancorp, Inc. (NASDAQ:RVSB) is about to trade ex-dividend in the next 3 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. 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 Riverview Bancorp's shares before the 2nd of January to receive the dividend, which will be paid on the 14th of January.
The company's next dividend payment will be US$0.02 per share. Last year, in total, the company distributed US$0.08 to shareholders. Looking at the last 12 months of distributions, Riverview Bancorp has a trailing yield of approximately 1.4% on its current stock price of US$5.78. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.
See our latest analysis for Riverview Bancorp
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. Last year, Riverview Bancorp paid out 335% of its profit to shareholders in the form of dividends. This is not sustainable behaviour and requires a closer look on behalf of the purchaser.
Generally, the higher a company's payout ratio, the more the dividend is at risk of being reduced.
Click here to see how much of its profit Riverview Bancorp paid out over the last 12 months.
Have Earnings And Dividends Been Growing?
Businesses with shrinking earnings are tricky from a dividend perspective. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. Riverview Bancorp's earnings per share have plummeted approximately 43% a year over the previous five years.
The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. In the past 10 years, Riverview Bancorp has increased its dividend at approximately 5.9% a year on average. That's intriguing, but the combination of growing dividends despite declining earnings can typically only be achieved by paying out a larger percentage of profits. Riverview Bancorp is already paying out 335% of its profits, and with shrinking earnings we think it's unlikely that this dividend will grow quickly in the future.