Some investors rely on dividends for growing their wealth, and if you're one of those dividend sleuths, you might be intrigued to know that Richmond Mutual Bancorporation, Inc. (NASDAQ:RMBI) is about to go ex-dividend in just 3 days. The ex-dividend date is one business day before the record date, which is the cut-off date for shareholders to be present on the company's books to be eligible for a dividend payment. 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 Richmond Mutual Bancorporation's shares on or after the 26th of February, you won't be eligible to receive the dividend, when it is paid on the 12th of March.

The company's next dividend payment will be US$0.15 per share, and in the last 12 months, the company paid a total of US$0.56 per share. Last year's total dividend payments show that Richmond Mutual Bancorporation has a trailing yield of 4.3% on the current share price of US$13.13. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. We need to see whether the dividend is covered by earnings and if it's growing.

Check out our latest analysis for Richmond Mutual Bancorporation

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. Richmond Mutual Bancorporation paid out more than half (60%) of its earnings last year, which is a regular payout ratio for most companies.

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.

Click here to see how much of its profit Richmond Mutual Bancorporation 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 business enters a downturn and the dividend is cut, the company could see its value fall precipitously. It's encouraging to see Richmond Mutual Bancorporation has grown its earnings rapidly, up 36% a year for the past 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 five years, Richmond Mutual Bancorporation has increased its dividend at approximately 23% a year on average. It's exciting to see that both earnings and dividends per share have grown rapidly over the past few years.

To Sum It Up

Has Richmond Mutual Bancorporation got what it takes to maintain its dividend payments? Earnings per share are growing nicely, and Richmond Mutual Bancorporation is paying out a percentage of its earnings that is around the average for dividend-paying stocks. In summary, Richmond Mutual Bancorporation appears to have some promise as a dividend stock, and we'd suggest taking a closer look at it.

Keen to explore more data on Richmond Mutual Bancorporation's financial performance? Check out our visualisation of its historical revenue and earnings growth.

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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.