UMB Financial (NASDAQ:UMBF) Will Pay A Larger Dividend Than Last Year At $0.39
UMB Financial Corporation (NASDAQ:UMBF) has announced that it will be increasing its dividend from last year's comparable payment on the 2nd of January to $0.39. This takes the annual payment to 2.5% of the current stock price, which unfortunately is below what the industry is paying.
Check out our latest analysis for UMB Financial
UMB Financial's Dividend Forecasted To Be Well Covered By Earnings
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.
Over the next 3 years, EPS is forecast to fall by 4.4%. 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
Even over a long history of paying dividends, the company's distributions have been remarkably stable. Since 2013, the annual payment back then was $0.86, compared to the most recent full-year payment of $1.56. This works out to be a compound annual growth rate (CAGR) of approximately 6.1% 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.
The Dividend Looks Likely To Grow
Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. It's encouraging to see that UMB Financial has been growing its earnings per share at 12% a year over the past five years. UMB Financial definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.
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 distributions are easily covered by earnings, and there is plenty of cash being generated as well. 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.
It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. However, there are other things to consider for investors when analysing stock performance. For example, we've identified 2 warning signs for UMB Financial (1 doesn't sit too well with us!) that you should be aware of before investing. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.
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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.
