Ames National (NASDAQ:ATLO) Has Affirmed Its Dividend Of $0.27
Ames National Corporation's (NASDAQ:ATLO) investors are due to receive a payment of $0.27 per share on 15th of February. Based on this payment, the dividend yield on the company's stock will be 6.1%, which is an attractive boost to shareholder returns.
Check out our latest analysis for Ames National
Ames National's Earnings Will Easily Cover The Distributions
While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable.
Ames National has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. Past distributions do not necessarily guarantee future ones, but Ames National's payout ratio of 74% is a good sign as this means that earnings decently cover dividends.
Looking forward, could fall by 2.6% if the company can't turn things around from the last few years. However, if the dividend continues along recent trends, we estimate the future payout ratio could reach 80%, meaning that most of the company's earnings is being paid out to shareholders.
Ames National Has A Solid Track Record
The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. The dividend has gone from an annual total of $0.60 in 2013 to the most recent total annual payment of $1.08. This means that it has been growing its distributions at 6.1% per annum over that time. The growth of the dividend has been pretty reliable, so we think this can offer investors some nice additional income in their portfolio.
Dividend Growth May Be Hard To Achieve
Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Let's not jump to conclusions as things might not be as good as they appear on the surface. In the last five years, Ames National's earnings per share has shrunk at approximately 2.6% per annum. If earnings continue declining, the company may have to make the difficult choice of reducing the dividend or even stopping it completely - the opposite of dividend growth.
In Summary
In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Ames National's payments, as there could be some issues with sustaining them into the future. While Ames National is earning enough to cover the dividend, we are generally unimpressed with its future prospects. We would be a touch cautious of relying on this stock primarily for the dividend income.
It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Are management backing themselves to deliver performance? Check their shareholdings in Ames National in our latest insider ownership analysis. If you are a dividend investor, you might also want to look at our curated 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.
