UMB Financial (NASDAQ:UMBF) Has Announced That It Will Be Increasing Its Dividend To $0.39
The board of UMB Financial Corporation (NASDAQ:UMBF) has announced that it will be paying its dividend of $0.39 on the 2nd of January, an increased payment from last year's comparable dividend. Although the dividend is now higher, the yield is only 2.2%, which is below the industry average.
See our latest analysis for UMB Financial
UMB Financial's Payment Expected To Have Solid Earnings Coverage
It would be nice for the yield to be higher, but we should also check if higher levels of dividend payment would be sustainable.
UMB Financial has a long history of paying out dividends, with its current track record at a minimum of 10 years. While past data isn't a guarantee for the future, UMB Financial's latest earnings report puts its payout ratio at 19%, showing that the company can pay out its dividends comfortably.
Looking forward, earnings per share is forecast to fall by 4.4% over the next 3 years. Despite that, analysts estimate the future payout ratio could be 22% over the same time period, which is in a pretty comfortable range.
UMB 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 $0.86, compared to the most recent full-year payment of $1.56. This means that it has been growing its distributions at 6.1% 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.
The Dividend Looks Likely To Grow
Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. UMB Financial has impressed us by growing EPS at 12% per year over the past five years. Growth in EPS bodes well for the dividend, as does the low payout ratio that the company is currently reporting.
UMB Financial Looks Like A Great Dividend Stock
Overall, a dividend increase is always good, and we think that UMB Financial 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.
Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For example, we've identified 2 warning signs for UMB Financial (1 is significant!) that you should be aware of before investing. If you are a dividend investor, you might also want to look at our curated list of high yield 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.
