Attention dividend hunters! UMB Financial Corporation (NASDAQ:UMBF) will be distributing its dividend of US$0.30 per share on the 01 April 2019, and will start trading ex-dividend in 4 days time on the 08 March 2019. Is this future income stream a compelling catalyst for dividend investors to think about the stock as an investment today? Let’s take a look at UMB Financial’s most recent financial data to examine its dividend characteristics in more detail.

View our latest analysis for UMB Financial

5 questions to ask before buying a dividend stock

If you are a dividend investor, you should always assess these five key metrics:

• Does it pay an annual yield higher than 75% of dividend payers?

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

• Has it increased its dividend per share amount over the past?

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

• Will the company be able to keep paying dividend based on the future earnings growth?

How well does UMB Financial fit our criteria?

The company currently pays out 29% of its earnings as a dividend, according to its trailing twelve-month data, meaning the dividend is sufficiently covered by earnings. Going forward, analysts expect UMBF’s payout to remain around the same level at 27% of its earnings. Assuming a constant share price, this equates to a dividend yield of 1.8%. Furthermore, EPS should increase to $4.59.

When assessing the forecast sustainability of a dividend it is also worth considering the cash flow of the business. Companies with strong cash flow can sustain a higher payout ratio, while companies with weaker cash flow generally cannot.

If dividend is a key criteria in your investment consideration, then you need to make sure the dividend stock you’re eyeing out is reliable in its payments. UMBF has increased its DPS from $0.70 to $1.2 in the past 10 years. It has also been paying out dividend consistently during this time, as you’d expect for a company increasing its dividend levels. This is an impressive feat, which makes UMBF a true dividend rockstar.

Relative to peers, UMB Financial produces a yield of 1.7%, which is on the low-side for Banks stocks.

Next Steps:

Considering the dividend attributes we analyzed above, UMB Financial is definitely worth keeping an eye on for someone looking to build a dedicated income portfolio. Given that this is purely a dividend analysis, I recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. Below, I’ve compiled three important factors you should further research:

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

2. Valuation: What is UMBF 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 UMBF is currently mispriced by the market.

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

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.