It looks like Magyar Bancorp, Inc. (NASDAQ:MGYR) is about to go ex-dividend in the next 4 days. The ex-dividend date is usually set to be one business day before the record date which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the 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. This means that investors who purchase Magyar Bancorp's shares on or after the 14th of November will not receive the dividend, which will be paid on the 27th of November.

The company's next dividend payment will be US$0.05 per share, on the back of last year when the company paid a total of US$0.27 to shareholders. Based on the last year's worth of payments, Magyar Bancorp stock has a trailing yield of around 2.2% on the current share price of US$12.45. If you buy this business for its dividend, you should have an idea of whether Magyar Bancorp's dividend is reliable and sustainable. As a result, readers should always check whether Magyar Bancorp has been able to grow its dividends, or if the dividend might be cut.

Check out our latest analysis for Magyar Bancorp

Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. Magyar Bancorp has a low and conservative payout ratio of just 16% of its income after tax.

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 Magyar Bancorp 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. That's why it's comforting to see Magyar Bancorp's earnings have been skyrocketing, up 23% per annum 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 last three years, Magyar Bancorp has lifted its dividend by approximately 31% a year on average. It's great to see earnings per share growing rapidly over several years, and dividends per share growing right along with it.

Final Takeaway

Has Magyar Bancorp got what it takes to maintain its dividend payments? Companies like Magyar Bancorp that are growing rapidly and paying out a low fraction of earnings, are usually reinvesting heavily in their business. This is one of the most attractive investment combinations under this analysis, as it can create substantial value for investors over the long run. Overall, Magyar Bancorp looks like a promising dividend stock in this analysis, and we think it would be worth investigating further.

With that in mind, a critical part of thorough stock research is being aware of any risks that stock currently faces. In terms of investment risks, we've identified 1 warning sign with Magyar Bancorp and understanding them should be part of your investment process.

A common investing mistake is buying the first interesting stock you see. Here you can find a full list of high-yield dividend stocks.

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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.