It looks like Codorus Valley Bancorp, Inc. (NASDAQ:CVLY) is about to go ex-dividend in the next 4 days. You can purchase shares before the 25th of January in order to receive the dividend, which the company will pay on the 9th of February.
Codorus Valley Bancorp's next dividend payment will be US$0.13 per share, on the back of last year when the company paid a total of US$0.40 to shareholders. Calculating the last year's worth of payments shows that Codorus Valley Bancorp has a trailing yield of 2.3% on the current share price of $17.62. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! As a result, readers should always check whether Codorus Valley Bancorp has been able to grow its dividends, or if the dividend might be cut.
Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. Codorus Valley Bancorp is paying out an acceptable 68% of its profit, a common payout level among most companies.
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 Codorus Valley Bancorp paid out over the last 12 months.
Have Earnings And Dividends Been Growing?
Businesses with shrinking earnings are tricky from a dividend perspective. If earnings fall far enough, the company could be forced to cut its dividend. Codorus Valley Bancorp's earnings per share have fallen at approximately 12% a year over the previous five years. Such a sharp decline casts doubt on the future sustainability of the dividend.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. In the past 10 years, Codorus Valley Bancorp has increased its dividend at approximately 17% a year on average. Growing the dividend payout ratio while earnings are declining can deliver nice returns for a while, but it's always worth checking for when the company can't increase the payout ratio any more - because then the music stops.
The Bottom Line
Should investors buy Codorus Valley Bancorp for the upcoming dividend? We're not overly enthused to see Codorus Valley Bancorp's earnings in retreat at the same time as the company is paying out more than half of its earnings as dividends to shareholders. Codorus Valley Bancorp doesn't appear to have a lot going for it, and we're not inclined to take a risk on owning it for the dividend.
Although, if you're still interested in Codorus Valley Bancorp and want to know more, you'll find it very useful to know what risks this stock faces. For example, we've found 3 warning signs for Codorus Valley Bancorp that we recommend you consider before investing in the business.
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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