Dividend-paying stocks, like the Bank of South Carolina Corporation (NASDAQ: BKSC), tend to be popular with investors, and for good reason – some research suggests that a significant amount of all stock market returns come from dividends reinvested. If you expect to live off the dividend income, it is important to be much more rigorous with your investments than the average bettor.
High yield and a long history of paying dividends are an attractive combination for Bank of South Carolina. It would come as no surprise to find that many investors buy it for dividends. Some simple research can reduce the risk of buying Bank of South Carolina for its dividends – read on to learn more.
Explore this interactive chart for our most recent Bank of South Carolina analysis!
Payment relationships
Dividends are usually paid out of the company’s profits. If a company pays more dividends than it has earned, then the dividend can become unsustainable – hardly an ideal situation. Comparing dividend payments to a company’s net profit after tax is a simple way to check the reality of whether a dividend is sustainable. Looking at the data, we can see that 55% of Bank of South Carolina’s profits were paid in the form of dividends in the last 12 months. This is a fairly normal proportion of payment among most companies. It allows a higher dividend to be paid to shareholders, but limits the capital retained in the business – which can be good or bad.
Remember that you can always get a snapshot of Bank of South Carolina’s latest financial situation by checking our view of your financial health.
Dividend volatility
Before buying a stock to earn its revenue, we want to see if dividends have been stable in the past and if the company has a history of maintaining its dividends. Bank of South Carolina has been paying dividends for a long time, but for the purpose of this analysis, we have examined only the last 10 years of payments. During this period, the dividend remained stable, which could imply that the business could have a relatively consistent profit power. During the previous 10-year period, the first annual payment was $ 0.3 in 2011, compared to $ 0.7 last year. Dividends per share grew approximately 8.5% per year over this period.
Dividends have grown at a reasonable rate over this period, and without major cuts in payment over time, we find this an attractive combination.
Dividend growth potential
Although dividend payments have been relatively reliable, it would also be a good thing if earnings per share (EPS) were growing, as this is essential to maintaining the dividend’s purchasing power in the long run. Gains have been growing at around 5.5% per year for the past five years, which is better than watching them shrink! Earnings per share are growing at an acceptable rate, although the company is paying more than half of its profits, which we believe could limit its ability to reinvest in its business.
Conclusion
Dividend investors should always want to know whether a) a company’s dividends are affordable, b) whether there is a history of consistent payments and c) whether the dividend is capable of growing. First, we think Bank of South Carolina has an acceptable payment rate. Second, earnings growth has been mediocre, but at least dividends have been relatively stable. Although we are not very pessimistic about this, we generally believe that there are potentially better dividend stocks than Bank of South Carolina.
Companies that have a stable dividend policy are likely to have greater investor interest than those that suffer from a more inconsistent approach. However, there are other things to be considered by investors when analyzing stock performance. For example, we choose 1 warning sign for Bank of South Carolina that investors should take into account.
If you are a dividend investor, you can also consult our curated list of dividend shares with a yield above 3%.
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This Simply Wall St article is of a general nature. It does not constitute a recommendation to buy or sell shares and does not take into account your objectives or your financial situation. Our goal is to bring you an analysis focused on the long term, conducted by fundamental data. Please note that our review may not take into account the latest ads from price-sensitive companies or qualitative materials. Simply Wall St has no position in any of the aforementioned shares.
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