Thursday, December 1 2022

Heritage Commerce Corp. (NASDAQ:HTBK) is set to trade ex-dividend in the next 3 days. The ex-dividend date occurs one day before the record date which is the day shareholders must be on the books of the company to receive a dividend. The ex-dividend date is important because any stock transaction must have settled before the record date to be eligible for a dividend. In other words, investors can buy shares of Heritage Commerce before November 7 in order to be eligible for the dividend, which will be paid on November 22.

The company’s next dividend payment will be $0.13 per share. Last year, in total, the company distributed US$0.52 to shareholders. Based on last year’s payouts, Heritage Commerce has a 3.7% return on the current stock price of $13.9. We love to see companies pay out a dividend, but it’s also important to make sure that laying the golden eggs doesn’t kill our golden hen! Therefore, readers should always check whether Heritage Commerce was able to increase its dividend or if the dividend could be reduced.

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Dividends are usually paid out of company profits. If a company pays out more dividends than it earns in profits, then the dividend could be unsustainable. Heritage Commerce paid out more than half (53%) of its profits last year, which is a regular payout ratio for most companies.

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

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

NasdaqGS: HTBK Historic Dividend November 3, 2022

Have earnings and dividends increased?

Companies with strong growth prospects are generally the best dividend payers because it is easier to increase dividends when earnings per share improve. If business goes into a recession and the dividend is cut, the company could see its value drop precipitously. That’s why it’s a relief to see that Heritage Commerce’s earnings per share have grown 6.3% annually over the past five years.

Many investors will gauge a company’s dividend yield by evaluating how much dividend payouts have changed over time. Heritage Commerce has recorded dividend growth of 18% per year on average over the past nine years. We are pleased to see dividends rising alongside earnings over several years, which may be a sign that the company intends to share the growth with shareholders.

Last takeaway

Should investors buy Heritage Commerce for the next dividend? Heritage Commerce has generated some growth in earnings per share while paying more than half of its profits to shareholders in the form of dividends. It might be worth investigating whether the company is reinvesting in growth projects that could increase earnings and dividends in the future, but at this time we are uncertain about its dividend outlook.

While you’re not overly concerned about Heritage Commerce’s ability to pay dividends, you should still keep in mind some of the other risks this company faces. Our analysis shows 2 warning signs for Heritage Commerce and you should know them before you buy shares.

If you are looking for good dividend payers, we recommend by consulting our selection of the best dividend-paying stocks.

Valuation is complex, but we help make it simple.

Find out if Heritage trade is potentially overvalued or undervalued by viewing our full analysis, which includes fair value estimates, risks and warnings, dividends, insider trading and financial health.

See the free analysis

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.


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