Canadian Western Bank's (TSE:CWB) Upcoming Dividend Will Be Larger Than Last Year's
Canadian Western Bank (TSE:CWB) will increase its dividend from last year's comparable payment on the 4th of January to CA$0.34. Based on this payment, the dividend yield for the company will be 4.4%, which is fairly typical for the industry.
Check out our latest analysis for Canadian Western Bank
Canadian Western Bank's Payment Expected To Have Solid Earnings Coverage
We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue.
Having distributed dividends for at least 10 years, Canadian Western Bank has a long history of paying out a part of its earnings to shareholders. Past distributions do not necessarily guarantee future ones, but Canadian Western Bank's payout ratio of 39% is a good sign as this means that earnings decently cover dividends.
Over the next 3 years, EPS is forecast to expand by 24.9%. Analysts estimate the future payout ratio will be 36% over the same time period, which is in the range that makes us comfortable with the sustainability of the dividend.
Canadian Western Bank Has A Solid Track Record
Even over a long history of paying dividends, the company's distributions have been remarkably stable. The dividend has gone from an annual total of CA$0.72 in 2013 to the most recent total annual payment of CA$1.36. This implies that the company grew its distributions at a yearly rate of about 6.6% over that duration. The dividend has been growing very nicely for a number of years, and has given its shareholders some nice income in their portfolios.
Dividend Growth May Be Hard To Achieve
The company's investors will be pleased to have been receiving dividend income for some time. Earnings has been rising at 3.7% per annum over the last five years, which admittedly is a bit slow. Earnings growth is slow, but on the plus side, the dividend payout ratio is low and dividends could grow faster than earnings, if the company decides to increase its payout ratio.
Canadian Western Bank Looks Like A Great Dividend Stock
Overall, a dividend increase is always good, and we think that Canadian Western Bank is a strong income stock thanks to its track record and growing earnings. Earnings are easily covering distributions, and the company is generating plenty of cash. 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. However, there are other things to consider for investors when analysing stock performance. Companies that are growing earnings tend to be the best dividend stocks over the long term. See what the 8 analysts we track are forecasting for Canadian Western Bank for free with public analyst estimates for the company. Is Canadian Western Bank 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.
