Alerus Financial Corp's Dividend Analysis
Assessing the Dividend Profile of Alerus Financial Corp
Alerus Financial Corp (NASDAQ:ALRS) recently announced a dividend of $0.19 per share, payable on 2024-01-12, with the ex-dividend date set for 2023-12-26. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into Alerus Financial Corp's dividend performance and assess its sustainability.
What Does Alerus Financial Corp Do?
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Alerus Financial Corp is a financial holding company registered in the United States. The company operates in four segments: Banking, Retirement & Benefit Services, Wealth Management, and Mortgage. It provides various banking services such as checking, debit cards, savings, current deposits, loans and advances, online banking, mobile banking, private banking, payment solutions, and other business products. Additionally, the company provides mortgage loans, retirement planning solutions, individual retirement accounts, retirement plan advisory services as well as wealth management services, including financial & estate planning, trust, and fiduciary services. The company's revenue mainly consists of interest income, commission, management fees, and other income.
A Glimpse at Alerus Financial Corp's Dividend History
Alerus Financial Corp has maintained a consistent dividend payment record since 2013. Dividends are currently distributed on a quarterly basis. Alerus Financial Corp has increased its dividend each year since 2013. The stock is thus listed as a dividend achiever, an honor that is given to companies that have increased their dividend each year for at least the past 10 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Alerus Financial Corp's Dividend Yield and Growth
As of today, Alerus Financial Corp currently has a 12-month trailing dividend yield of 3.29% and a 12-month forward dividend yield of 3.38%. This suggests an expectation of increased dividend payments over the next 12 months. Over the past three years, Alerus Financial Corp's annual dividend growth rate was 7.10%. Extended to a five-year horizon, this rate increased to 7.30% per year. Based on Alerus Financial Corp's dividend yield and five-year growth rate, the 5-year yield on cost of Alerus Financial Corp stock as of today is approximately 4.68%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-09-30, Alerus Financial Corp's dividend payout ratio is 0.40.
Alerus Financial Corp's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Alerus Financial Corp's profitability 5 out of 10 as of 2023-09-30, suggesting fair profitability. The company has reported positive net income for each of year over the past decade, further solidifying its high profitability.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Alerus Financial Corp's growth rank of 5 out of 10 suggests that the company has a fair growth outlook. Revenue is the lifeblood of any company, and Alerus Financial Corp's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Alerus Financial Corp's revenue has increased by approximately -3.50% per year on average, a rate that underperforms than approximately 89.65% of global competitors.
The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, Alerus Financial Corp's earnings increased by approximately 3.20% per year on average, a rate that underperforms than approximately 68.25% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 15.60%, which underperforms than approximately 26.67% of global competitors.
Next Steps
In conclusion, Alerus Financial Corp's consistent dividend payments and growth rate, combined with a reasonable payout ratio and fair profitability, present a balanced dividend profile. However, the growth metrics indicate some areas where Alerus Financial Corp falls behind its global competitors, which could be a point of consideration for investors looking at long-term dividend sustainability. As value investors seek to make informed financial decisions, it's essential to weigh these factors carefully. Will Alerus Financial Corp's dividend continue to grow at a steady pace, or will the company need to make strategic changes to maintain its dividend achiever status? For those interested in exploring further, GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
This article first appeared on GuruFocus.
