Chemung Financial (NASDAQ:CHMG) Will Pay A Dividend Of $0.31
Chemung Financial Corporation (NASDAQ:CHMG) has announced that it will pay a dividend of $0.31 per share on the 2nd of January. Including this payment, the dividend yield on the stock will be 2.7%, which is a modest boost for shareholders' returns.
See our latest analysis for Chemung Financial
Chemung Financial's Earnings Will Easily Cover The Distributions
The dividend yield is a little bit low, but sustainability of the payments is also an important part of evaluating an income stock.
Chemung Financial has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. Using data from its latest earnings report, Chemung Financial's payout ratio sits at 20%, an extremely comfortable number that shows that it can pay its dividend.
Over the next 3 years, EPS is forecast to fall by 11.6%. Fortunately, analysts forecast the future payout ratio to be 23% over the same time horizon, which is in the range that makes us comfortable with the sustainability of the dividend.
Chemung Financial Has A Solid Track Record
The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. Since 2013, the annual payment back then was $1.00, compared to the most recent full-year payment of $1.24. This works out to be a compound annual growth rate (CAGR) of approximately 2.2% a year over that time. While the consistency in the dividend payments is impressive, we think the relatively slow rate of growth is less attractive.
The Dividend Looks Likely To Grow
The company's investors will be pleased to have been receiving dividend income for some time. Chemung Financial has impressed us by growing EPS at 20% per year over the past five years. A low payout ratio gives the company a lot of flexibility, and growing earnings also make it very easy for it to grow the dividend.
Chemung Financial Looks Like A Great Dividend Stock
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 company is generating plenty of cash, and the earnings also quite easily cover the distributions. 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 of these factors considered, we think this has solid potential as a dividend stock.
It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For instance, we've picked out 1 warning sign for Chemung Financial that investors should take into consideration. Is Chemung 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.
