Unity Bancorp's (NASDAQ:UNTY) Upcoming Dividend Will Be Larger Than Last Year's
Unity Bancorp, Inc.'s (NASDAQ:UNTY) dividend will be increasing from last year's payment of the same period to $0.12 on 23rd of June. Even though the dividend went up, the yield is still quite low at only 2.1%.
Check out our latest analysis for Unity Bancorp
Unity Bancorp's Payment Expected To Have Solid Earnings Coverage
Even a low dividend yield can be attractive if it is sustained for years on end.
Having distributed dividends for at least 10 years, Unity Bancorp has a long history of paying out a part of its earnings to shareholders. Using data from its latest earnings report, Unity Bancorp's payout ratio sits at 12%, an extremely comfortable number that shows that it can pay its dividend.
The next year is set to see EPS grow by 0.8%. If the dividend continues on this path, the future payout ratio could be 14% by next year, which we think can be pretty sustainable going forward.
Unity Bancorp 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 $0.0364, compared to the most recent full-year payment of $0.48. This works out to be a compound annual growth rate (CAGR) of approximately 29% a year over that time. It is good to see that there has been strong dividend growth, and that there haven't been any cuts for a long time.
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. Unity Bancorp has seen EPS rising for the last five years, at 23% per annum. Earnings have been growing rapidly, and with a low payout ratio we think that the company could turn out to be a great dividend stock.
We Really Like Unity Bancorp's 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 company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. All in all, this checks a lot of the boxes we look for when choosing an income stock.
Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Companies that are growing earnings tend to be the best dividend stocks over the long term. See what the 3 analysts we track are forecasting for Unity Bancorp for free with public analyst estimates for the company. 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.
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