Cass Information Systems, Inc.'s (NASDAQ:CASS) periodic dividend will be increasing on the 15th of December to $0.29, with investors receiving 3.6% more than last year's $0.28. This will take the dividend yield to an attractive 2.7%, providing a nice boost to shareholder returns.
Cass Information Systems' Earnings Easily Cover The Distributions
Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. Before making this announcement, Cass Information Systems was easily earning enough to cover the dividend. This means that most of what the business earns is being used to help it grow.
If the trend of the last few years continues, EPS will grow by 6.6% over the next 12 months. Assuming the dividend continues along recent trends, we think the payout ratio could be 47% by next year, which is in a pretty sustainable range.
Cass Information Systems Has A Solid Track Record
The company has an extended history of paying stable dividends. The dividend has gone from an annual total of $0.468 in 2012 to the most recent total annual payment of $1.12. This means that it has been growing its distributions at 9.1% per annum over that time. Companies like this can be very valuable over the long term, if the decent rate of growth can be maintained.
We Could See Cass Information Systems' Dividend Growing
Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Cass Information Systems has seen EPS rising for the last five years, at 6.6% per annum. Cass Information Systems definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.
We Really Like Cass Information Systems' Dividend
Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. 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.
Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. However, there are other things to consider for investors when analysing stock performance. You can also discover whether shareholders are aligned with insider interests by checking our visualisation of insider shareholdings and trades in Cass Information Systems stock. If you are a dividend investor, you might also want to look at our curated list of high yield 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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