Should you buy Ameris Bancorp (NASDAQ: ABCB) for its next dividend?
It looks like Ameris Bancorp (NASDAQ: ABCB) is set to be ex-dividend within the next four days. The ex-dividend date is one business day before a company’s registration date, which is the date the company determines which shareholders are entitled to receive a dividend. The ex-dividend date is important because the settlement process involves two full business days. So if you miss this date, you would not appear on the company’s books on the date of registration. As a result, Ameris Bancorp investors who buy the shares on or after September 29 will not receive the dividend, which will be paid on October 8.
The company’s next dividend payment will be US $ 0.15 per share, compared to last year when the company paid a total of US $ 0.60 to shareholders. Calculating the value of last year’s payouts shows Ameris Bancorp has a rolling 1.2% return on the current share price of $ 49.54. Dividends are a major contributor to returns on investment for long-term holders, but only if the dividend continues to be paid. Accordingly, readers should always check whether Ameris Bancorp has been able to increase its dividends or whether the dividend could be reduced.
Check out our latest review for Ameris Bancorp
Dividends are usually paid out of business income, so if a business pays more than it earned, its dividend is usually at risk of being reduced. Ameris Bancorp pays only 9.8% of its after-tax profit, which is comfortably low and leaves a lot of leeway in the event of adverse events.
When a company has paid less dividends than it made a profit, it usually suggests that 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 company goes into recession.
Click here to view the company’s payout ratio, as well as analysts’ estimates of its future dividends.
Have profits and dividends increased?
Companies with strong growth prospects generally make the best dividend payers because dividends are easier to grow when earnings per share improve. If business goes into recession and the dividend is reduced, the company could experience a sharp drop in value. That’s why it’s heartwarming to see Ameris Bancorp’s profits skyrocket, rising 37% annually over the past five years.
Another key way to measure a company’s dividend outlook is to measure its historical rate of dividend growth. Over the past seven years, Ameris Bancorp has increased its dividend by around 17% per year on average. It is exciting to see that earnings and dividends per share have grown rapidly over the past few years.
Should investors buy Ameris Bancorp for the next dividend? Typically, companies that grow rapidly and pay a small fraction of the profits keep the profits to reinvest in the business. This strategy can bring significant added value to shareholders over the long term, provided it is applied without issuing too many new shares. Overall, Ameris Bancorp appears to be a promising dividend-paying stock in this analysis, and we think it would be worth studying further.
With this in mind, an essential part of in-depth stock research is being aware of the risks stocks currently face. Every business has risks, and we have spotted 1 warning sign for Ameris Bancorp you should know.
However, we don’t recommend simply buying the first dividend stock you see. Here is a list of interesting dividend paying stocks with a yield above 2% and a dividend coming soon.
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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative material. Simply Wall St does not have any position in the mentioned stocks.
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