Cambridge Bancorp (NASDAQ:CATC) Is Paying Out A Larger Dividend Than Last Year
The board of Cambridge Bancorp (NASDAQ:CATC) has announced that it will be paying its dividend of $0.67 on the 25th of May, an increased payment from last year's comparable dividend. This makes the dividend yield 5.1%, which is 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. Cambridge Bancorp'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 Cambridge Bancorp
Cambridge Bancorp's Dividend Forecasted To Be Well Covered By Earnings
A big dividend yield for a few years doesn't mean much if it can't be sustained.
Cambridge Bancorp has a long history of paying out dividends, with its current track record at a minimum of 10 years. Past distributions do not necessarily guarantee future ones, but Cambridge Bancorp's payout ratio of 37% is a good sign as this means that earnings decently cover dividends.
The next year is set to see EPS grow by 7.1%. If the dividend continues along recent trends, we estimate the future payout ratio will be 39%, which is in the range that makes us comfortable with the sustainability of the dividend.
Cambridge Bancorp Has A Solid Track Record
The company has an extended history of paying stable dividends. Since 2013, the dividend has gone from $1.48 total annually to $2.68. This means that it has been growing its distributions at 6.1% per annum 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 Looks Likely To Grow
The company's investors will be pleased to have been receiving dividend income for some time. Cambridge Bancorp has impressed us by growing EPS at 11% per year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for Cambridge Bancorp's prospects of growing its dividend payments in the future.
We should note that Cambridge Bancorp has issued stock equal to 12% of shares outstanding. Regularly doing this can be detrimental - it's hard to grow dividends per share when new shares are regularly being created.
Cambridge Bancorp Looks Like A Great Dividend Stock
In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. 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.
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. For instance, we've picked out 2 warning signs for Cambridge Bancorp that investors should take into consideration. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.
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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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