Spirit of Texas Bancshares, Inc. (NASDAQ:STXB) is about to trade ex-dividend in the next 3 days. The ex-dividend date is usually set to be one business day before the record date which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the 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. This means that investors who purchase Spirit of Texas Bancshares' shares on or after the 24th of June will not receive the dividend, which will be paid on the 30th of June.
The company's next dividend payment will be US$0.09 per share, and in the last 12 months, the company paid a total of US$0.36 per share. Based on the last year's worth of payments, Spirit of Texas Bancshares has a trailing yield of 1.6% on the current stock price of $23.01. If you buy this business for its dividend, you should have an idea of whether Spirit of Texas Bancshares's dividend is reliable and sustainable. As a result, readers should always check whether Spirit of Texas Bancshares has been able to grow its dividends, or if the dividend might be cut.
Check out our latest analysis for Spirit of Texas Bancshares
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Spirit of Texas Bancshares is paying out just 12% of its profit after tax, which is comfortably low and leaves plenty of breathing room in the case of adverse events.
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?
Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. It's encouraging to see Spirit of Texas Bancshares has grown its earnings rapidly, up 35% a year for the past five years.
Given that Spirit of Texas Bancshares has only been paying a dividend for a year, there's not much of a past history to draw insight from.
To Sum It Up
From a dividend perspective, should investors buy or avoid Spirit of Texas Bancshares? Typically, companies that are growing rapidly and paying out a low fraction of earnings are keeping the profits for reinvestment in the business. Perhaps even more importantly - this can sometimes signal management is focused on the long term future of the business. Spirit of Texas Bancshares 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.