Want to participate in a research study ? Help shape the future of investing tools and earn a $60 gift card!
Dividends play a key role in compounding returns over time and can form a large part of our portfolio return. Historically, Sandy Spring Bancorp, Inc. ( NASDAQ:SASR ) has paid a dividend to shareholders. It currently yields 3.4%. Let's dig deeper into whether Sandy Spring Bancorp should have a place in your portfolio.
Here's how I find good dividend stocks
When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas:
- Is its annual yield among the top 25% of dividend-paying companies?
- Has it consistently paid a stable dividend without missing a payment or drastically cutting payout?
- Has dividend per share amount increased over the past?
- Is its earnings sufficient to payout dividend at the current rate?
- Will it be able to continue to payout at the current rate in the future?
How does Sandy Spring Bancorp fare?
The current trailing twelve-month payout ratio for the stock is 39%, which means that the dividend is covered by earnings. In the near future, analysts are predicting lower payout ratio of 33% which, assuming the share price stays the same, leads to a dividend yield of around 3.7%. However, EPS should increase to $3.14, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment.
When thinking about whether a dividend is sustainable, another factor to consider is the cash flow . Companies with strong cash flow can sustain a higher payout ratio, while companies with weaker cash flow generally cannot.
If dividend is a key criteria in your investment consideration, then you need to make sure the dividend stock you're eyeing out is reliable in its payments. Although SASR's per share payments have increased in the past 10 years, it has not been a completely smooth ride. Shareholders would have seen a few years of reduced payments in this time.
In terms of its peers, Sandy Spring Bancorp has a yield of 3.4%, which is high for Banks stocks but still below the market's top dividend payers.
With these dividend metrics in mind, I definitely rank Sandy Spring Bancorp as a strong income stock, and is worth further research for anyone who considers dividends an important part of their portfolio strategy. Given that this is purely a dividend analysis, I recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. I've put together three essential aspects you should further research:
- Future Outlook : What are well-informed industry analysts predicting for SASR’s future growth? Take a look at our free research report of analyst consensus for SASR’s outlook.
- Valuation : What is SASR 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 SASR 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 email@example.com . 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.