First US Bancshares, Inc. (NASDAQ:FUSB) is about to trade ex-dividend in the next three days. The ex-dividend date is one business day before a company’s record date, which is the date on which the company determines which shareholders are entitled to receive a dividend. The ex-dividend date is important as the process of settlement involves a full business day. So if you miss that date, you would not show up on the company’s books on the record date. This means that investors who purchase First US Bancshares’ shares on or after the 12th of September will not receive the dividend, which will be paid on the 1st of October.
The company’s upcoming dividend is US$0.07 a share, following on from the last 12 months, when the company distributed a total of US$0.28 per share to shareholders. Looking at the last 12 months of distributions, First US Bancshares has a trailing yield of approximately 2.3% on its current stock price of US$12.01. If you buy this business for its dividend, you should have an idea of whether First US Bancshares’s dividend is reliable and sustainable. So we need to investigate whether First US Bancshares can afford its dividend, and if the dividend could grow.
If a company pays out more in dividends than it earned, then the dividend might become unsustainable – hardly an ideal situation. Fortunately First US Bancshares’s payout ratio is modest, at just 26% of profit.
Generally speaking, the lower a company’s payout ratios, the more resilient its dividend usually is.
Check out our latest analysis for First US Bancshares
Click here to see how much of its profit First US Bancshares paid out over the last 12 months.
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 earnings fall far enough, the company could be forced to cut its dividend. With that in mind, we’re encouraged by the steady growth at First US Bancshares, with earnings per share up 7.3% on average over the last five years.
Another key way to measure a company’s dividend prospects is by measuring its historical rate of dividend growth. First US Bancshares has delivered 13% dividend growth per year on average over the past 10 years. We’re glad to see dividends rising alongside earnings over a number of years, which may be a sign the company intends to share the growth with shareholders.
