Auburn National Bancorporation (NASDAQ:AUBN) Has Affirmed Its Dividend Of $0.27
Auburn National Bancorporation, Inc. (NASDAQ:AUBN) has announced that it will pay a dividend of $0.27 per share on the 25th of March. This makes the dividend yield 5.1%, which will augment investor returns quite nicely.
See our latest analysis for Auburn National Bancorporation
Auburn National Bancorporation Not Expected To Earn Enough To Cover Its Payments
If the payments aren't sustainable, a high yield for a few years won't matter that much.
Auburn National Bancorporation has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. Despite this history however, the company's latest earnings report actually shows that it didn't have enough earnings to cover its dividends. This is an alarming sign that could mean that Auburn National Bancorporation's dividend at its current rate may no longer be sustainable for longer.
If the company can't turn things around, EPS could fall by 30.3% over the next year. If the dividend continues along recent trends, we estimate the future payout ratio could reach 398%, which could put the dividend in jeopardy if the company's earnings don't improve.
Auburn National Bancorporation Has A Solid Track Record
The company has a sustained record of paying dividends with very little fluctuation. The annual payment during the last 10 years was $0.84 in 2014, and the most recent fiscal year payment was $1.08. This implies that the company grew its distributions at a yearly rate of about 2.5% over that duration. Dividends have grown relatively slowly, which is not great, but some investors may value the relative consistency of the dividend.
The Dividend Has Limited Growth Potential
Investors could be attracted to the stock based on the quality of its payment history. Let's not jump to conclusions as things might not be as good as they appear on the surface. Auburn National Bancorporation's EPS has fallen by approximately 30% per year during the past five years. Such rapid declines definitely have the potential to constrain dividend payments if the trend continues into the future.
The Dividend Could Prove To Be Unreliable
Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. We can't deny that the payments have been very stable, but we are a little bit worried about the very high payout ratio. This company is not in the top tier of income providing stocks.
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. Just as an example, we've come across 4 warning signs for Auburn National Bancorporation you should be aware of, and 1 of them is concerning. Is Auburn National Bancorporation 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.
