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It looks like Community West Bancshares (NASDAQ:CWBC) is about to go ex-dividend in the next four days. You can purchase shares before the 13th of August in order to receive the dividend, which the company will pay on the 31st of August.
Community West Bancshares's next dividend payment will be US$0.045 per share. Last year, in total, the company distributed US$0.18 to shareholders. Based on the last year's worth of payments, Community West Bancshares stock has a trailing yield of around 2.3% on the current share price of $7.84. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.
See our latest analysis for Community West Bancshares
Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. Community West Bancshares paid out just 24% of its profit last year, which we think is conservatively low and leaves plenty of margin for unexpected circumstances.
Generally speaking, the lower a company's payout ratios, the more resilient its dividend usually is.
Click here to see how much of its profit Community West Bancshares paid out over the last 12 months.
Have Earnings And Dividends Been Growing?
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. With that in mind, we're encouraged by the steady growth at Community West Bancshares, with earnings per share up 3.2% on average over the last five years.
Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. In the past six years, Community West Bancshares has increased its dividend at approximately 14% 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.
Final Takeaway
Has Community West Bancshares got what it takes to maintain its dividend payments? It has been growing its earnings per share somewhat in recent years, although it reinvests more than half its earnings in the business, which could suggest there are some growth projects that have not yet reached fruition. In summary, Community West Bancshares appears to have some promise as a dividend stock, and we'd suggest taking a closer look at it.