There is a lot to be liked about American National Bankshares Inc (NASDAQ:AMNB) as an income stock, over the past 10 years it has returned an average of 4.00% per year. The company currently pays out a dividend yield of 2.53% to shareholders, making it a relatively attractive dividend stock. Does American National Bankshares tick all the boxes of a great dividend stock? Below, I’ll take you through my analysis. Check out our latest analysis for American National Bankshares
5 questions I ask before picking a dividend stock
When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas:
- Is its annual yield among the top 25% of dividend payers?
- Does it consistently pay out dividends without missing a payment or significantly cutting payout?
- Has dividend per share amount increased over the past?
- Can it afford to pay the current rate of dividends from its earnings?
- Will the company be able to keep paying dividend based on the future earnings growth?
Does American National Bankshares pass our checks?
American National Bankshares has a trailing twelve-month payout ratio of 54.97%, meaning the dividend is sufficiently covered by earnings. However, going forward, analysts expect AMNB’s payout to fall to 36.11% of its earnings, which leads to a dividend yield of around 2.63%. However, EPS should increase to $2.58, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment. If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. AMNB has increased its DPS from $0.92 to $1 in the past 10 years. During this period it has not missed a payment, as one would expect for a company increasing its dividend. These are all positive signs of a great, reliable dividend stock. In terms of its peers, American National Bankshares generates a yield of 2.53%, which is on the low-side for Banks stocks.
Keeping in mind the dividend characteristics above, American National Bankshares is definitely worth considering for investors looking to build a dedicated income portfolio. Given that this is purely a dividend analysis, I recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. There are three relevant aspects you should look at:
- Future Outlook: What are well-informed industry analysts predicting for AMNB’s future growth? Take a look at our free research report of analyst consensus for AMNB’s outlook.
- Valuation: What is AMNB worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether AMNB is currently mispriced by the market.
- Other Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.