Readers wishing to buy US Bancorp (NYSE: USB) for its dividend will have to make its move shortly, as the stock is about to trade ex-dividend. Typically, the ex-dividend date is one business day prior to the record date which is the date a company determines which shareholders are eligible to receive a dividend. The ex-dividend date is important because every time a stock is bought or sold, the transaction takes at least two business days to settle. In other words, investors can buy shares of US Bancorp before September 29 in order to be eligible for the dividend, which will be paid on October 15.

The company’s next dividend will be US $ 0.46 per share. Last year, in total, the company distributed US $ 1.68 to shareholders. Based on the value of last year’s payouts, the US Bancorp stock has a rolling yield of approximately 3.1% on the current stock price of $ 59.79. If you are buying this company for its dividend, you should know if the dividend from US Bancorp is reliable and sustainable. You have to see if the dividend is covered by profits and if it increases.

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. That’s why it’s good to see US Bancorp donate a modest 36% of its profits.

Generally speaking, the lower a company’s payout ratios, the more resilient its dividend.

Click here to view the company’s payout ratio, as well as analysts’ estimates of its future dividends.

NYSE: Historic USB Dividend September 26, 2021

Have profits and dividends increased?

Stocks of companies that generate sustainable earnings growth often offer the best dividend prospects because it’s easier to raise the dividend when earnings rise. If profits fall and the company is forced to cut its dividend, investors could see the value of their investment go up in smoke. That’s why it’s a relief to see US Bancorp’s earnings per share increase by 8.3% per year over the past five years.

Another key way to measure a company’s dividend outlook is to measure its historical rate of dividend growth. US Bancorp has generated an average annual increase of 25% per year in its dividend, based on dividend payments over the past 10 years. It is encouraging to see the company raising its dividends as profits rise, suggesting at least some corporate interest in rewarding shareholders.

The bottom line

Does US Bancorp have what it takes to maintain its dividend payments? US Bancorp has seen its earnings per share rise slowly in recent years, and the company is reinvesting more than half of its earnings back into the business, which generally bodes well for its future prospects. Overall, US Bancorp appears to be a promising dividend-paying stock in this analysis, and we think it would be worthwhile to investigate further.

Although it is tempting to invest in US Bancorp for dividends only, you should always be aware of the risks involved. Our analysis shows 1 warning sign for US Bancorp and you should be aware of this before buying any stocks.

A common investment mistake is to buy the first interesting stock you see. Here you will find a list of promising dividend paying stocks with a yield above 2% and an upcoming dividend.

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 documents. Simply Wall St has no position in the mentioned stocks.

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