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Have you been keeping an eye on Guaranty Bancorp’s (NASDAQ:GBNK) upcoming dividend of US$0.16 per share payable on the 31 August 2018? Then you only have 2 days left before the stock starts trading ex-dividend on the 23 August 2018. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I take a deeper dive into Guaranty Bancorp’s latest financial data to analyse its dividend attributes.

Check out our latest analysis for Guaranty Bancorp

5 questions to ask before buying a dividend stock

When researching a dividend stock, I always follow the following screening criteria:

• Is it paying an annual yield above 75% of dividend payers?

• Has it consistently paid a stable dividend without missing a payment or drastically cutting payout?

• Has the amount of dividend per share grown over the past?

• Can it afford to pay the current rate of dividends from its earnings?

• Will it be able to continue to payout at the current rate in the future?

How does Guaranty Bancorp fare?

The current trailing twelve-month payout ratio for the stock is 36.08%, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting lower payout ratio of 31.42%, leading to a dividend yield of around 2.13%. However, EPS should increase to $2, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment.

If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. The reality is that it is too early to consider Guaranty Bancorp as a dividend investment. It has only been consistently paying dividends for 5 years, however, standard practice for reliable payers is to look for a 10-year minimum track record.

Compared to its peers, Guaranty Bancorp generates a yield of 2.10%, which is on the low-side for Banks stocks.

Next Steps:

Whilst there are few things you may like about Guaranty Bancorp from a dividend stock perspective, the truth is that overall it probably is not the best choice for a dividend investor. But if you are not exclusively a dividend investor, the stock could still be an interesting investment opportunity. Given that this is purely a dividend analysis, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. There are three pertinent factors you should further research:

1. Future Outlook: What are well-informed industry analysts predicting for GBNK’s future growth? Take a look at our free research report of analyst consensus for GBNK’s outlook.

2. Valuation: What is GBNK worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether GBNK is currently mispriced by the market.

3. Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.