Assessing the Sustainability and Growth of United Security Bancshares's Dividends
United Security Bancshares (UBFO, Financial) recently announced a dividend of $0.12 per share, payable on 2024-01-19, with the ex-dividend date set for 2024-01-02. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into United Security Bancshares's dividend performance and assess its sustainability.
What Does United Security Bancshares Do?
United Security Bancshares operates as the holding for United Security Bank. It provides commercial banking services to the business and professional community, and individuals located in Fresno, Madera, and Kern Counties. It offers checking and savings accounts, deposits, mortgage loans, credit and debit cards, safe deposit boxes, automated teller machines, wire transfers, money market accounts, mobile banking, and wealth management services. The company's primary sources of revenue are interest income from loans and investment securities.
A Glimpse at United Security Bancshares's Dividend History
United Security Bancshares has maintained a consistent dividend payment record since 2017. Dividends are currently distributed on a quarterly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down United Security Bancshares's Dividend Yield and Growth
As of today, United Security Bancshares currently has a 12-month trailing dividend yield of 5.54% and a 12-month forward dividend yield of 5.78%. This suggests an expectation of increased dividend payments over the next 12 months. Extended to a five-year horizon, this rate increased to 10.20% per year. Based on United Security Bancshares's dividend yield and five-year growth rate, the 5-year yield on cost of United Security Bancshares stock as of today is approximately 8.87%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-09-30, United Security Bancshares's dividend payout ratio is 0.40.
United Security Bancshares's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks United Security Bancshares's profitability 6 out of 10 as of 2023-09-30, suggesting fair profitability. The company has reported positive net income for each of year over the past decade, further solidifying its high profitability.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. United Security Bancshares's growth rank of 6 out of 10 suggests that the company has a fair growth outlook.
Revenue is the lifeblood of any company, and United Security Bancshares's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. United Security Bancshares's revenue has increased by approximately 3.40% per year on average, a rate that underperforms than approximately 68.33% of global competitors.
The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, United Security Bancshares's earnings increased by approximately 1.10% per year on average, a rate that underperforms than approximately 74.62% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 4.10%, which underperforms than approximately 64.54% of global competitors.
Next Steps
When considering the future of United Security Bancshares's dividend payments, investors should weigh the company's consistent dividend history against its moderate profitability and growth metrics. While the payout ratio appears sustainable, the underperformance in revenue and earnings growth relative to global competitors could be a concern. However, the company's ability to maintain positive net income over the past decade provides some assurance of financial stability. Investors should monitor these factors to gauge the potential for ongoing dividend reliability and growth. For those seeking to expand their portfolios with high-dividend yield stocks, GuruFocus Premium users can utilize the High Dividend Yield Screener for further research and investment opportunities.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
