Arrow Financial (NASDAQ:AROW) Will Pay A Dividend Of $0.27
Arrow Financial Corporation (NASDAQ:AROW) will pay a dividend of $0.27 on the 15th of June. The dividend yield will be 5.2% based on this payment which is still above the industry average.
While the dividend yield is important for income investors, it is also important to consider any large share price moves, as this will generally outweigh any gains from distributions. Arrow Financial's stock price has reduced by 34% in the last 3 months, which is not ideal for investors and can explain a sharp increase in the dividend yield.
See our latest analysis for Arrow Financial
Arrow Financial's Dividend Forecasted To Be Well Covered By Earnings
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, 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 36% is a good sign as this means that earnings decently cover dividends.
Looking forward, EPS is forecast to rise by 4.4% over the next 3 years. Analysts estimate the future payout ratio will be 37% over the same time period, which is in the range that makes us comfortable with the sustainability of the dividend.
Arrow Financial Has A Solid Track Record
The company has an extended history of paying stable dividends. Since 2013, the annual payment back then was $0.751, compared to the most recent full-year payment of $1.08. This works out to be a compound annual growth rate (CAGR) of approximately 3.7% a year over that time. Slow and steady dividend growth might not sound that exciting, but dividends have been stable for ten years, which we think makes this a fairly attractive offer.
The Dividend Looks Likely To Grow
Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Arrow Financial has seen EPS rising for the last five years, at 10% per annum. A low payout ratio and decent growth suggests that the company is reinvesting well, and it also has plenty of room to increase the dividend over time.
We Really Like Arrow Financial's Dividend
Overall, we like to see the dividend staying consistent, and we think Arrow Financial might even raise payments in the future. 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. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. See if management have their own wealth at stake, by checking insider shareholdings in Arrow Financial stock. 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.
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