Important news for shareholders and potential investors in Community Bank System, Inc. (NYSE:CBU): The dividend payment of US$0.38 per share will be distributed to shareholders on 10 April 2019, and the stock will begin trading ex-dividend at an earlier date, 14 March 2019. What does this mean for current shareholders and potential investors? Below, I will explain how holding Community Bank System can impact your portfolio income stream, by analysing the stock’s most recent financial data and dividend attributes.
5 checks you should do on a dividend stock
When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas:
- Is it the top 25% annual dividend yield payer?
- Has it consistently paid a stable dividend without missing a payment or drastically cutting payout?
- Has dividend per share risen in the past couple of years?
- Does earnings amply cover its dividend payments?
- Will it be able to continue to payout at the current rate in the future?
How does Community Bank System fare?
Community Bank System has a trailing twelve-month payout ratio of 44%, which means that the dividend is covered by earnings. In the near future, analysts are predicting a payout ratio of 47% which, assuming the share price stays the same, leads to a dividend yield of 2.6%. Furthermore, EPS is forecasted to fall to $3.19 in the upcoming year.
If you want to dive deeper into the sustainability of a certain payout ratio, you may wish to consider the cash flow of the business. A company with strong cash flow, relative to earnings, can sometimes sustain a high pay out ratio.
If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. In the case of CBU it has increased its DPS from $0.88 to $1.52 in the past 10 years. During this period it has not missed a payment, as one would expect for a company increasing its dividend. These are all positive signs of a great, reliable dividend stock.
Relative to peers, Community Bank System generates a yield of 2.5%, which is on the low-side for Banks stocks.
Taking into account the dividend metrics, Community Bank System ticks most of the boxes as a strong dividend investment, putting it in my list of top dividend payers. Given that this is purely a dividend analysis, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. There are three relevant factors you should further research:
- Future Outlook: What are well-informed industry analysts predicting for CBU’s future growth? Take a look at our free research report of analyst consensus for CBU’s outlook.
- Valuation: What is CBU 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 CBU is currently mispriced by the market.
- 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 firstname.lastname@example.org. 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.