C&F Financial Corporation (NASDAQ:CFFI) will increase its dividend from last year's comparable payment on the 1st of October to $0.42. This takes the annual payment to 3.5% of the current stock price, which is about average for the industry.
C&F Financial's Earnings Will Easily Cover The Distributions
Unless the payments are sustainable, the dividend yield doesn't mean too much.
C&F Financial has a long history of paying out dividends, with its current track record at a minimum of 10 years. While past data isn't a guarantee for the future, C&F Financial's latest earnings report puts its payout ratio at 22%, showing that the company can pay out its dividends comfortably.
Over the next year, EPS could expand by 14.3% if recent trends continue. Assuming the dividend continues along recent trends, we think the future payout ratio could be 20% by next year, which is in a pretty sustainable range.
C&F Financial Has A Solid Track Record
The company has a sustained record of paying dividends with very little fluctuation. The dividend has gone from an annual total of $1.04 in 2012 to the most recent total annual payment of $1.68. This works out to be a compound annual growth rate (CAGR) of approximately 4.9% 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
The company's investors will be pleased to have been receiving dividend income for some time. C&F Financial has seen EPS rising for the last five years, at 14% per annum. C&F Financial definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.
We Really Like C&F Financial's Dividend
Overall, a dividend increase is always good, and we think that C&F Financial is a strong income stock thanks to its track record and growing earnings. 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. Taking this all into consideration, this looks like it could be a good dividend opportunity.
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. Are management backing themselves to deliver performance? Check their shareholdings in C&F Financial in our latest insider ownership analysis. Is C&F 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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