Ames National (NASDAQ:ATLO) Has Announced A 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 May. This means the annual payment is 5.8% of the current stock price, which is above the average for the industry.
See our latest analysis for Ames National
Ames National Will Pay Out More Than It Is Earning
While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable.
Having distributed dividends for at least 10 years, Ames National has a long history of paying out a part of its earnings to shareholders. Taking data from its last earnings report, calculating for the company's payout ratio shows 90%, which means that Ames National would be able to pay its last dividend without pressure on the balance sheet.
EPS is set to fall by 8.0% over the next 12 months if recent trends continue. If the dividend continues along recent trends, we estimate the future payout ratio could reach 103%, which could put the dividend in jeopardy if the company's earnings don't improve.
Ames National Has A Solid Track Record
The company has a sustained record of paying dividends with very little fluctuation. Since 2014, the annual payment back then was $0.64, compared to the most recent full-year payment of $1.08. This works out to be a compound annual growth rate (CAGR) of approximately 5.4% a year over that time. Companies like this can be very valuable over the long term, if the decent rate of growth can be maintained.
Dividend Growth May Be Hard To Come By
The company's investors will be pleased to have been receiving dividend income for some time. However, things aren't all that rosy. It's not great to see that Ames National's earnings per share has fallen at approximately 8.0% per year over the past five years. If the company is making less over time, it naturally follows that it will also have to pay out less in dividends.
The Dividend Could Prove To Be Unreliable
Overall, it's nice to see a consistent dividend payment, but we think that longer term, the current level of payment might be unsustainable. In the past the payments have been stable, but we think the company is paying out too much for this to continue for the long term. We don't think Ames National is a great stock to add to your portfolio if income is your focus.
Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Case in point: We've spotted 2 warning signs for Ames National (of which 1 can't be ignored!) you should know about. 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.
