A large part of investment returns can be generated by dividend-paying stock given their role in compounding returns over time. Over the past 10 years, Columbia Banking System Inc (NASDAQ:COLB) has returned an average of 2.00% per year to shareholders in terms of dividend yield. Should it have a place in your portfolio? Let’s take a look at Columbia Banking System in more detail. View our latest analysis for Columbia Banking System
5 questions to ask before buying a dividend stock
If you are a dividend investor, you should always assess these five key metrics:
- Is its annual yield among the top 25% of dividend-paying companies?
- Has it consistently paid a stable dividend without missing a payment or drastically cutting payout?
- Has the amount of dividend per share grown over the past?
- Is its earnings sufficient to payout dividend at the current rate?
- Will it be able to continue to payout at the current rate in the future?
Does Columbia Banking System pass our checks?
Columbia Banking System has a trailing twelve-month payout ratio of 47.34%, meaning the dividend is sufficiently covered by earnings. However, going forward, analysts expect COLB’s payout to fall to 33.67% of its earnings, which leads to a dividend yield of around 2.15%. However, EPS should increase to $2.75, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment. If dividend is a key criteria in your investment consideration, then you need to make sure the dividend stock you’re eyeing out is reliable in its payments. Whilst its per-share payments have increased during the past 10 years, there has been some hiccups. Investors have seen reductions in the dividend per share in the past, although, it has picked up again. Relative to peers, Columbia Banking System generates a yield of 1.98%, which is on the low-side for Banks stocks.
Taking into account the dividend metrics, Columbia Banking System ticks most of the boxes as a strong dividend investment, putting it in my list of top dividend payers. Given that this is purely a dividend analysis, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. There are three pertinent aspects you should further research:
- Future Outlook: What are well-informed industry analysts predicting for COLB’s future growth? Take a look at our free research report of analyst consensus for COLB’s outlook.
- Valuation: What is COLB 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 COLB 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.