Advertisement
New Zealand markets closed
  • NZX 50

    12,105.29
    +94.63 (+0.79%)
     
  • NZD/USD

    0.5982
    -0.0023 (-0.39%)
     
  • NZD/EUR

    0.5537
    -0.0006 (-0.10%)
     
  • ALL ORDS

    8,153.70
    +80.10 (+0.99%)
     
  • ASX 200

    7,896.90
    +77.30 (+0.99%)
     
  • OIL

    82.54
    +1.19 (+1.46%)
     
  • GOLD

    2,234.20
    +21.50 (+0.97%)
     
  • NASDAQ

    18,281.60
    +0.75 (+0.00%)
     
  • FTSE

    7,972.72
    +40.74 (+0.51%)
     
  • Dow Jones

    39,762.34
    +2.26 (+0.01%)
     
  • DAX

    18,506.98
    +29.89 (+0.16%)
     
  • Hang Seng

    16,541.42
    +148.58 (+0.91%)
     
  • NIKKEI 225

    40,168.07
    -594.66 (-1.46%)
     
  • NZD/JPY

    90.4340
    -0.3460 (-0.38%)
     

Meridian Corporation (NASDAQ:MRBK) Passed Our Checks, And It's About To Pay A US$0.25 Dividend

It looks like Meridian Corporation (NASDAQ:MRBK) is about to go ex-dividend in the next four days. The ex-dividend date is usually set to be one business day before the record date which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the dividend. The ex-dividend date is important because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend. Accordingly, Meridian investors that purchase the stock on or after the 13th of February will not receive the dividend, which will be paid on the 21st of February.

The company's next dividend payment will be US$0.25 per share. Last year, in total, the company distributed US$2.00 to shareholders. Looking at the last 12 months of distributions, Meridian has a trailing yield of approximately 6.3% on its current stock price of $32. 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! So we need to check whether the dividend payments are covered, and if earnings are growing.

Check out our latest analysis for Meridian

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Meridian is paying out just 22% of its profit after tax, which is comfortably low and leaves plenty of breathing room in the case of adverse events.

ADVERTISEMENT

Generally speaking, the lower a company's payout ratios, the more resilient its dividend usually is.

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

historic-dividend
historic-dividend

Have Earnings And Dividends Been Growing?

Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. It's encouraging to see Meridian has grown its earnings rapidly, up 51% a year for the past five years.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Since the start of our data, two years ago, Meridian has lifted its dividend by approximately 100% a year on average. It's exciting to see that both earnings and dividends per share have grown rapidly over the past few years.

The Bottom Line

Has Meridian got what it takes to maintain its dividend payments? Companies like Meridian that are growing rapidly and paying out a low fraction of earnings, are usually reinvesting heavily in their business. This is one of the most attractive investment combinations under this analysis, as it can create substantial value for investors over the long run. Overall, Meridian looks like a promising dividend stock in this analysis, and we think it would be worth investigating further.

In light of that, while Meridian has an appealing dividend, it's worth knowing the risks involved with this stock. In terms of investment risks, we've identified 1 warning sign with Meridian and understanding them should be part of your investment process.

A common investing mistake is buying the first interesting stock you see. Here you can find a full list of high-yield dividend stocks.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.

Join A Paid User Research Session
You’ll receive a US$30 Amazon Gift card for 1 hour of your time while helping us build better investing tools for the individual investors like yourself. Sign up here