Cass Information Systems, Inc. (NASDAQ:CASS) Stock Goes Ex-Dividend In Just Three Days

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Cass Information Systems, Inc. (NASDAQ:CASS) stock is about to trade ex-dividend in three days. Typically, the ex-dividend date is one business day before the record date which is the date on which a company determines the shareholders eligible to receive a dividend. The ex-dividend date is an important date to be aware of as any purchase of the stock made on or after this date might mean a late settlement that doesn’t show on the record date. Therefore, if you purchase Cass Information Systems’ shares on or after the 4th of June, you won’t be eligible to receive the dividend, when it is paid on the 14th of June.

The company’s next dividend payment will be US$0.30 per share, on the back of last year when the company paid a total of US$1.20 to shareholders. Based on the last year’s worth of payments, Cass Information Systems stock has a trailing yield of around 2.9% on the current share price of US$42.10. 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! That’s why we should always check whether the dividend payments appear sustainable, and if the company is growing.

See our latest analysis for Cass Information Systems

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. Cass Information Systems is paying out an acceptable 53% of its profit, a common payout level among most companies.

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 Cass Information Systems paid out over the last 12 months.

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Have Earnings And Dividends Been Growing?

Stocks with flat earnings can still be attractive dividend payers, but it is important to be more conservative with your approach and demand a greater margin for safety when it comes to dividend sustainability. If earnings fall far enough, the company could be forced to cut its dividend. That explains why we’re not overly excited about Cass Information Systems’s flat earnings over the past five years. It’s better than seeing them drop, certainly, but over the long term, all of the best dividend stocks are able to meaningfully grow their earnings per share.

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, Cass Information Systems has increased its dividend at approximately 7.1% a year on average.

The Bottom Line

Has Cass Information Systems got what it takes to maintain its dividend payments? Cass Information Systems’s earnings are effectively flat over recent years, even as the company pays out more than half of its earnings to shareholders as dividends. We think there are likely better opportunities out there.

However if you’re still interested in Cass Information Systems as a potential investment, you should definitely consider some of the risks involved with Cass Information Systems. In terms of investment risks, we’ve identified 1 warning sign with Cass Information Systems and understanding them should be part of your investment process.

Generally, we wouldn’t recommend just buying the first dividend stock you see. Here’s a curated list of interesting stocks that are strong dividend payers.

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.

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