ChoiceOne Financial Services' (NASDAQ:COFS) Dividend Will Be Increased To $0.27
ChoiceOne Financial Services, Inc.'s (NASDAQ:COFS) periodic dividend will be increasing on the 29th of December to $0.27, with investors receiving 3.8% more than last year's $0.26. This makes the dividend yield about the same as the industry average at 4.0%.
Check out our latest analysis for ChoiceOne Financial Services
ChoiceOne Financial Services' Earnings Will Easily Cover The Distributions
Solid dividend yields are great, but they only really help us if the payment is sustainable.
ChoiceOne Financial Services has a long history of paying out dividends, with its current track record at a minimum of 10 years. Taking data from its last earnings report, calculating for the company's payout ratio shows 35%, which means that ChoiceOne Financial Services would be able to pay its last dividend without pressure on the balance sheet.
Looking forward, earnings per share is forecast to fall by 0.7% over the next year. But if the dividend continues along recent trends, we estimate the future payout ratio could be 38%, which we would consider to be quite comfortable looking forward, with most of the company's earnings left over to grow the business in the future.
ChoiceOne Financial Services 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. The dividend has gone from an annual total of $0.472 in 2013 to the most recent total annual payment of $1.04. This works out to be a compound annual growth rate (CAGR) of approximately 8.2% a year over that time. Companies like this can be very valuable over the long term, if the decent rate of growth can be maintained.
ChoiceOne Financial Services Could Grow Its Dividend
The company's investors will be pleased to have been receiving dividend income for some time. ChoiceOne Financial Services has impressed us by growing EPS at 9.6% per year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for ChoiceOne Financial Services' prospects of growing its dividend payments in the future.
We Really Like ChoiceOne Financial Services' Dividend
Overall, a dividend increase is always good, and we think that ChoiceOne Financial Services is a strong income stock thanks to its track record and growing earnings. 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.
Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. As an example, we've identified 1 warning sign for ChoiceOne Financial Services that you should be aware of before investing. Is ChoiceOne Financial Services 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.
