It looks like M&T Bank Corporation (NYSE:MTB) is about to go ex-dividend in the next 3 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 important because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend. Meaning, you will need to purchase M&T Bank's shares before the 2nd of December to receive the dividend, which will be paid on the 31st of December.

The company's next dividend payment will be US$1.35 per share, on the back of last year when the company paid a total of US$5.40 to shareholders. Looking at the last 12 months of distributions, M&T Bank has a trailing yield of approximately 2.4% on its current stock price of US$220.80. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. As a result, readers should always check whether M&T Bank has been able to grow its dividends, or if the dividend might be cut.

Check out our latest analysis for M&T Bank

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. That's why it's good to see M&T Bank paying out a modest 39% of its earnings.

When a company paid out less in dividends than it earned in profit, this generally suggests its dividend is affordable. The lower the % of its profit that it pays out, the greater the margin of safety for the dividend if the business enters a downturn.

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

Have Earnings And Dividends Been Growing?

Companies that aren't growing their earnings can still be valuable, but it is even more important to assess the sustainability of the dividend if it looks like the company will struggle to grow. If earnings fall far enough, the company could be forced to cut its dividend. It's not encouraging to see that M&T Bank's earnings are effectively flat over the past five years. We'd take that over an earnings decline any day, but in the long run, the best dividend stocks all 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 last 10 years, M&T Bank has lifted its dividend by approximately 6.8% a year on average.

Final Takeaway

Is M&T Bank worth buying for its dividend? Earnings per share have been flat in recent years, although M&T Bank reinvests more than half its earnings in the business, which could suggest there are some growth projects that have not yet reached fruition. Overall, M&T Bank looks like a promising dividend stock in this analysis, and we think it would be worth investigating further.

So while M&T Bank looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. In terms of investment risks, we've identified 1 warning sign with M&T Bank 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.