Arrow Financial (NASDAQ:AROW) Has Announced A Dividend Of $0.27
Arrow Financial Corporation (NASDAQ:AROW) has announced that it will pay a dividend of $0.27 per share on the 15th of September. This means the annual payment is 5.6% of the current stock price, which is above the average for the industry.
See our latest analysis for Arrow Financial
Arrow Financial's Dividend Forecasted To Be Well Covered By Earnings
If the payments aren't sustainable, a high yield for a few years won't matter that much.
Having distributed dividends for at least 10 years, Arrow Financial has a long history of paying out a part of its earnings to shareholders. Past distributions do not necessarily guarantee future ones, but Arrow Financial's payout ratio of 46% is a good sign as this means that earnings decently cover dividends.
Looking forward, earnings per share is forecast to rise by 5.7% over the next year. Assuming the dividend continues along recent trends, we think the future payout ratio could be 45% by next year, which is in a pretty sustainable range.
Arrow Financial 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. Since 2013, the dividend has gone from $0.766 total annually to $1.08. This means that it has been growing its distributions at 3.5% per annum over that time. Although we can't deny that the dividend has been remarkably stable in the past, the growth has been pretty muted.
The Dividend's Growth Prospects Are Limited
Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Earnings has been rising at 2.3% per annum over the last five years, which admittedly is a bit slow. Arrow Financial is struggling to find viable investments, so it is returning more to shareholders. This could mean the dividend doesn't have the growth potential we look for going into the future.
We Really Like Arrow Financial's Dividend
Overall, we think that this is a great income investment, and we think that maintaining the dividend this year may have been a conservative choice. Earnings are easily covering distributions, and the company is generating plenty of cash. Taking this all into consideration, this looks like it could be a good dividend opportunity.
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. Now, if you want to look closer, it would be worth checking out our free research on Arrow Financial management tenure, salary, and performance. Is Arrow Financial 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.
