Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Webster Financial Corporation (NYSE:WBS) is about to trade ex-dividend in the next 4 days. The ex-dividend date is one business day before a company's record date, which is the date on which the company determines which shareholders are entitled to receive a dividend. The ex-dividend date is of consequence because whenever a stock is bought or sold, the trade takes at least one business day to settle. In other words, investors can purchase Webster Financial's shares before the 12th of May in order to be eligible for the dividend, which will be paid on the 22nd of May.

The company's next dividend payment will be US$0.40 per share, and in the last 12 months, the company paid a total of US$1.60 per share. Last year's total dividend payments show that Webster Financial has a trailing yield of 3.3% on the current share price of US$48.59. If you buy this business for its dividend, you should have an idea of whether Webster Financial's dividend is reliable and sustainable. We need to see whether the dividend is covered by earnings and if it's growing.

Our free stock report includes 1 warning sign investors should be aware of before investing in Webster Financial. Read for free now.

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. That's why it's good to see Webster Financial paying out a modest 27% of its earnings.

Generally speaking, the lower a company's payout ratios, the more resilient its dividend usually is.

See our latest analysis for Webster Financial

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.NYSE:WBS Historic Dividend May 7th 2025

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 decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. With that in mind, we're not enthused to see that Webster Financial's earnings per share have remained effectively flat 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.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Since the start of our data, 10 years ago, Webster Financial has lifted its dividend by approximately 7.2% a year on average.

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The Bottom Line

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

On that note, you'll want to research what risks Webster Financial is facing. To help with this, we've discovered 1 warning sign for Webster Financial that you should be aware of before investing in their shares.

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.

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