Cathay General Bancorp (NASDAQ:CATY) Is Paying Out A Dividend Of $0.34
Cathay General Bancorp (NASDAQ:CATY) has announced that it will pay a dividend of $0.34 per share on the 9th of June. This means the dividend yield will be fairly typical at 4.4%.
Check out our latest analysis for Cathay General Bancorp
Cathay General Bancorp's Earnings Will Easily Cover The Distributions
While it is always good to see a solid dividend yield, we should also consider whether the payment is feasible.
Cathay General Bancorp has a long history of paying out dividends, with its current track record at a minimum of 10 years. Using data from its latest earnings report, Cathay General Bancorp's payout ratio sits at 20%, an extremely comfortable number that shows that it can pay its dividend.
EPS is set to fall by 5.7% over the next 12 months. But assuming the dividend continues along recent trends, we believe the future payout ratio could be 29%, which we are pretty comfortable with and we think would be feasible on an earnings basis.
Cathay General Bancorp Has A Solid Track Record
Even over a long history of paying dividends, the company's distributions have been remarkably stable. The annual payment during the last 10 years was $0.04 in 2013, and the most recent fiscal year payment was $1.36. This means that it has been growing its distributions at 42% per annum over that time. Rapidly growing dividends for a long time is a very valuable feature for an income stock.
The Dividend Looks Likely To Grow
The company's investors will be pleased to have been receiving dividend income for some time. It's encouraging to see that Cathay General Bancorp has been growing its earnings per share at 17% a year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for Cathay General Bancorp's prospects of growing its dividend payments in the future.
We Really Like Cathay General Bancorp's Dividend
In summary, it is good to see that the dividend is staying consistent, and we don't think there is any reason to suspect this might change over the medium term. The earnings easily cover the company's distributions, and the company is generating plenty of cash. We should point out that the earnings are expected to fall over the next 12 months, which won't be a problem if this doesn't become a trend, but could cause some turbulence in the next year. 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 example, we've picked out 1 warning sign for Cathay General Bancorp that investors should know about before committing capital to this stock. Is Cathay General Bancorp 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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