Community Bank System, Inc. (NYSE:CBU) has announced that it will be increasing its dividend from last year's comparable payment on the 10th of October to $0.44. Based on this payment, the dividend yield for the company will be 2.6%, which is fairly typical for the industry.
Community Bank System's Earnings Will Easily Cover The Distributions
We like a dividend to be consistent over the long term, so checking whether it is sustainable is important.
Community Bank System has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. Based on Community Bank System's last earnings report, the payout ratio is at a decent 53%, meaning that the company is able to pay out its dividend with a bit of room to spare.
Looking forward, EPS is forecast to rise by 32.3% over the next 3 years. Analysts forecast the future payout ratio could be 44% over the same time horizon, which is a number we think the company can maintain.
Community Bank System 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 annual payment during the last 10 years was $1.04 in 2012, and the most recent fiscal year payment was $1.76. This means that it has been growing its distributions at 5.4% per annum over that time. The growth of the dividend has been pretty reliable, so we think this can offer investors some nice additional income in their portfolio.
Community Bank System Could Grow Its Dividend
The company's investors will be pleased to have been receiving dividend income for some time. Community Bank System has seen EPS rising for the last five years, at 9.0% per annum. Since earnings per share is growing at an acceptable rate, and the payout policy is balanced, we think the company is positioning itself well to grow earnings and dividends in the future.
We Really Like Community Bank System's 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.
Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. However, there are other things to consider for investors when analysing stock performance. Earnings growth generally bodes well for the future value of company dividend payments. See if the 7 Community Bank System analysts we track are forecasting continued growth with our free report on analyst estimates for the company. Is Community Bank System 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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