Important news for shareholders and potential investors in U.S. Bancorp ( NYSE:USB ): The dividend payment of US$0.37 per share will be distributed to shareholders on 15 April 2019, and the stock will begin trading ex-dividend at an earlier date, 28 March 2019. Is this future income a persuasive enough catalyst for investors to think about U.S. Bancorp as an investment today? Below, I’m going to look at the latest data and analyze the stock and its dividend property in further detail.
Want to participate in a research study ? Help shape the future of investing tools and earn a $60 gift card!
Here’s how I find good dividend stocks
When researching a dividend stock, I always follow the following screening criteria:
- Does it pay an annual yield higher than 75% of dividend payers?
- Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?
- Has the amount of dividend per share grown over the past?
- Is its earnings sufficient to payout dividend at the current rate?
- Based on future earnings growth, will it be able to continue to payout dividend at the current rate?
Does U.S. Bancorp pass our checks?
The current trailing twelve-month payout ratio for the stock is 32%, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting a higher payout ratio of 38% which, assuming the share price stays the same, leads to a dividend yield of 3.5%. Furthermore, EPS should increase to $4.33. The higher payout forecasted, along with higher earnings, should lead to greater dividend income for investors moving forward.
If you want to dive deeper into the sustainability of a certain payout ratio, you may wish to consider the cash flow of the business . Cash flow is important because companies with strong cash flow can usually sustain higher payout ratios.
If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. USB has increased its DPS from $0.20 to $1.48 in the past 10 years. It has also been paying out dividend consistently during this time, as you’d expect for a company increasing its dividend levels. This is an impressive feat, which makes USB a true dividend rockstar.
In terms of its peers, U.S. Bancorp generates a yield of 3.1%, which is high for Banks stocks but still below the market’s top dividend payers.
With this in mind, I definitely rank U.S. Bancorp as a strong dividend stock, and makes it worth further research for anyone who likes steady income generation from their portfolio. Given that this is purely a dividend analysis, you should always research extensively before deciding whether or not a stock is an appropriate investment for you. I always recommend analysing the company’s fundamentals and underlying business before making an investment decision. Below, I’ve compiled three pertinent aspects you should further examine:
- Future Outlook : What are well-informed industry analysts predicting for USB’s future growth? Take a look at our free research report of analyst consensus for USB’s outlook.
- Valuation : What is USB worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether USB is currently mispriced by the market.
- Other Dividend Rockstars : Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here .
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org . 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.