Amalgamated Financial Corp.'s (NASDAQ:AMAL) investors are due to receive a payment of $0.10 per share on 24th of November. The dividend yield is 2.3% based on this payment, which is a little bit low compared to the other companies in the industry.
Amalgamated Financial's Payment Expected To Have Solid Earnings Coverage
While yield is important, another factor to consider about a company's dividend is whether the current payout levels are feasible.
Amalgamated Financial has a good history of paying out dividends, with its current track record at 5 years. While past records don't necessarily translate into future results, the company's payout ratio of 3.4% also shows that Amalgamated Financial is able to comfortably pay dividends.
Over the next 3 years, EPS is forecast to expand by 10.4%. Analysts estimate the future payout ratio will be 13% over the same time period, which is in the range that makes us comfortable with the sustainability of the dividend.
Amalgamated Financial Is Still Building Its Track Record
It is great to see that Amalgamated Financial has been paying a stable dividend for a number of years now, however we want to be a bit cautious about whether this will remain true through a full economic cycle. The annual payment during the last 5 years was $0.24 in 2018, and the most recent fiscal year payment was $0.40. This means that it has been growing its distributions at 11% per annum over that time. The dividend has been growing rapidly, however with such a short payment history we can't know for sure if payment can continue to grow over the long term, so caution may be warranted.
The Dividend Looks Likely To Grow
Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. It's encouraging to see that Amalgamated Financial has been growing its earnings per share at 28% a year over the past five years. Rapid earnings growth and a low payout ratio suggest this company has been effectively reinvesting in its business. Should that continue, this company could have a bright future.
Amalgamated Financial Looks Like A Great Dividend Stock
In summary, it is good to see that the dividend is staying consistent, and we don't think there is any reason to suspect this might change over the medium term. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. All in all, this checks a lot of the boxes we look for when choosing an income stock.
Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. However, there are other things to consider for investors when analysing stock performance. For instance, we've picked out 1 warning sign for Amalgamated Financial that investors should take into consideration. Is Amalgamated Financial not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.
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