C&F Financial Corporation (NASDAQ:CFFI) Passed Our Checks, And It’s About To Pay A US$0.46 Dividend

Regular readers will know that we love our dividends at Simply Wall St, which is why it’s exciting to see C&F Financial Corporation (NASDAQ:CFFI) is about to trade ex-dividend in the next 4 days. The ex-dividend date is one business day before a company’s record date, which is the date on which the company determines which shareholders are entitled to receive a dividend. The ex-dividend date is of consequence because whenever a stock is bought or sold, the trade takes at least one business day to settle. Thus, you can purchase C&F Financial’s shares before the 15th of December in order to receive the dividend, which the company will pay on the 1st of January.

The company’s upcoming dividend is US$0.46 a share, following on from the last 12 months, when the company distributed a total of US$1.84 per share to shareholders. Based on the last year’s worth of payments, C&F Financial stock has a trailing yield of around 2.7% on the current share price of US$69.39. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. So we need to investigate whether C&F Financial can afford its dividend, and if the dividend could grow.

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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. C&F Financial has a low and conservative payout ratio of just 22% of its income after tax.

Companies that pay out less in dividends than they earn in profits generally have more sustainable dividends. The lower the payout ratio, the more wiggle room the business has before it could be forced to cut the dividend.

Check out our latest analysis for C&F Financial

Click here to see how much of its profit C&F Financial paid out over the last 12 months.

Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If earnings fall far enough, the company could be forced to cut its dividend. This is why it’s a relief to see C&F Financial earnings per share are up 8.1% per annum over the last five years.

The main way most investors will assess a company’s dividend prospects is by checking the historical rate of dividend growth. In the past 10 years, C&F Financial has increased its dividend at approximately 4.4% a year on average. It’s encouraging to see the company lifting dividends while earnings are growing, suggesting at least some corporate interest in rewarding shareholders.

Has C&F Financial got what it takes to maintain its dividend payments? C&F Financial has seen its earnings per share grow slowly in recent years, and the company reinvests more than half of its profits in the business, which generally bodes well for its future prospects. Overall, C&F Financial looks like a promising dividend stock in this analysis, and we think it would be worth investigating further.

In light of that, while C&F Financial has an appealing dividend, it’s worth knowing the risks involved with this stock. For example – C&F Financial has 1 warning sign we think you should be aware of.

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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.