United Bankshares (NASDAQ:UBSI) Is Increasing Its Dividend To $0.37
United Bankshares, Inc.'s (NASDAQ:UBSI) periodic dividend will be increasing on the 2nd of January to $0.37, with investors receiving 2.8% more than last year's $0.36. This takes the annual payment to 4.3% of the current stock price, which is about average for the industry.
Check out our latest analysis for United Bankshares
United Bankshares' Earnings Will Easily Cover The Distributions
We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue.
Having distributed dividends for at least 10 years, United Bankshares has a long history of paying out a part of its earnings to shareholders. Taking data from its last earnings report, calculating for the company's payout ratio shows 50%, which means that United Bankshares would be able to pay its last dividend without pressure on the balance sheet.
EPS is set to fall by 9.9% over the next 3 years. Despite that, analysts estimate the future payout ratio could be 57% over the same time period, which is in a pretty comfortable range.
United Bankshares 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 dividend has gone from $1.24 total annually to $1.44. This works out to be a compound annual growth rate (CAGR) of approximately 1.5% a year over that time. Although we can't deny that the dividend has been remarkably stable in the past, the growth has been pretty muted.
We Could See United Bankshares' Dividend Growing
Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. We are encouraged to see that United Bankshares has grown earnings per share at 7.4% per year over the past five years. Earnings are on the uptrend, and it is only paying a small portion of those earnings to shareholders.
We Really Like United Bankshares' 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 distributions are easily covered by earnings, and there is plenty of cash being generated as well. If earnings do fall over the next 12 months, the dividend could be buffeted a little bit, but we don't think it should cause too much of a problem in the long term. Taking this all into consideration, this looks like it could be a good dividend opportunity.
It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Taking the debate a bit further, we've identified 1 warning sign for United Bankshares that investors need to be conscious of moving forward. Is United Bankshares 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.
