Ames National (NASDAQ:ATLO) Is Paying Out A Dividend Of $0.27
The board of Ames National Corporation (NASDAQ:ATLO) has announced that it will pay a dividend on the 15th of August, with investors receiving $0.27 per share. This makes the dividend yield 5.9%, which will augment investor returns quite nicely.
See our latest analysis for Ames National
Ames National's Earnings Will Easily Cover The Distributions
A big dividend yield for a few years doesn't mean much if it can't be sustained.
Ames National has a long history of paying out dividends, with its current track record at a minimum of 10 years. Taking data from its last earnings report, calculating for the company's payout ratio shows 56%, which means that Ames National would be able to pay its last dividend without pressure on the balance sheet.
If the trend of the last few years continues, EPS will grow by 4.9% over the next 12 months. If the dividend continues on this path, the future payout ratio could be 56% by next year, which we think can be pretty sustainable going forward.
Ames National Has A Solid Track Record
Even over a long history of paying dividends, the company's distributions have been remarkably stable. Since 2013, the annual payment back then was $0.60, compared to the most recent full-year payment of $1.08. This works out to be a compound annual growth rate (CAGR) of approximately 6.1% a year over that time. Dividends have grown at a reasonable rate over this period, and without any major cuts in the payment over time, we think this is an attractive combination as it provides a nice boost to shareholder returns.
The Dividend's Growth Prospects Are Limited
The company's investors will be pleased to have been receiving dividend income for some time. Earnings has been rising at 4.9% per annum over the last five years, which admittedly is a bit slow. Growth of 4.9% may indicate that the company has limited investment opportunity so it is returning its earnings to shareholders instead. This isn't necessarily bad, but we wouldn't expect rapid dividend growth in the future.
We Really Like Ames National's Dividend
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. Distributions are quite easily covered by earnings, which are also being converted to cash flows. Taking this all into consideration, this looks like it could be a good dividend opportunity.
Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. See if management have their own wealth at stake, by checking insider shareholdings in Ames National stock. Is Ames National not quite the opportunity you were looking for? Why not check out our selection of top 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.
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