It looks like AmeriServ Financial, Inc. (NASDAQ:ASRV) is about to go ex-dividend in the next four days. You will need to purchase shares before the 30th of October to receive the dividend, which will be paid on the 16th of November.
AmeriServ Financial's upcoming dividend is US$0.025 a share, following on from the last 12 months, when the company distributed a total of US$0.10 per share to shareholders. Looking at the last 12 months of distributions, AmeriServ Financial has a trailing yield of approximately 3.4% on its current stock price of $2.93. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. So we need to investigate whether AmeriServ Financial can afford its dividend, and if the dividend could grow.
See our latest analysis for AmeriServ Financial
Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. AmeriServ Financial paid out a comfortable 37% of its profit last year. AmeriServ Financial paid a dividend despite reporting negative free cash flow last year. That's typically a bad combination and - if this were more than a one-off - not sustainable.
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 how much of its profit AmeriServ Financial paid out over the last 12 months.
Have Earnings And Dividends Been Growing?
Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. For this reason, we're glad to see AmeriServ Financial's earnings per share have risen 12% per annum over the last five years.
The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Since the start of our data, eight years ago, AmeriServ Financial has lifted its dividend by approximately 12% a year on average. It's great to see earnings per share growing rapidly over several years, and dividends per share growing right along with it.
Is AmeriServ Financial worth buying for its dividend? When companies are growing rapidly and retaining a majority of the profits within the business, it's usually a sign that reinvesting earnings creates more value than paying dividends to shareholders. This is one of the most attractive investment combinations under this analysis, as it can create substantial value for investors over the long run. Overall, AmeriServ Financial looks like a promising dividend stock in this analysis, and we think it would be worth investigating further.
In light of that, while AmeriServ Financial has an appealing dividend, it's worth knowing the risks involved with this stock. To help with this, we've discovered 3 warning signs for AmeriServ Financial that you should be aware of before investing in their shares.
We wouldn't recommend just buying the first dividend stock you see, though. Here's a list of interesting dividend stocks with a greater than 2% yield and an upcoming dividend.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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