Valley National Bancorp's Dividend Analysis
Assessing the Sustainability and Growth of Valley National Bancorp's Dividends
Valley National Bancorp (NASDAQ:VLY) recently announced a dividend of $0.11 per share, payable on 2024-01-03, with the ex-dividend date set for 2023-12-13. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into Valley National Bancorp's dividend performance and assess its sustainability.
What Does Valley National Bancorp Do?
This Powerful Chart Made Peter Lynch 29% A Year For 13 Years
How to calculate the intrinsic value of a stock?
Valley National Bancorp is a bank holding company whose principal wholly-owned subsidiary is Valley National Bank. It provides a full range of commercial, retail, and trust and investment services largely through its offices and ATM network throughout northern and central New Jersey, New York City and Long Island, Florida, and Alabama. The segments of the group are commercial lending, consumer lending, investment management, and corporate and other adjustments, of which key interest income is derived from the commercial lending segment. In recent years, the company has focused on acquiring companies that operate outside of traditional banking and has emphasized wealth and capital management.
A Glimpse at Valley National Bancorp's Dividend History
Valley National Bancorp has maintained a consistent dividend payment record since 1984. Dividends are currently distributed on a quarterly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Valley National Bancorp's Dividend Yield and Growth
As of today, Valley National Bancorp currently has a 12-month trailing dividend yield of 4.39% and a 12-month forward dividend yield of 4.39%. This suggests an expectation of same dividend payments over the next 12 months. And over the past decade, Valley National Bancorp's annual dividends per share growth rate stands at -2.90%. Based on Valley National Bancorp's dividend yield and five-year growth rate, the 5-year yield on cost of Valley National Bancorp stock as of today is approximately 4.39%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-09-30, Valley National Bancorp's dividend payout ratio is 0.38. Valley National Bancorp's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Valley National Bancorp's profitability 5 out of 10 as of 2023-09-30, suggesting fair profitability. The company has reported positive net income for each of year over the past decade, further solidifying its high profitability.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Valley National Bancorp's growth rank of 5 out of 10 suggests that the company has a fair growth outlook. Revenue is the lifeblood of any company, and Valley National Bancorp's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Valley National Bancorp's revenue has increased by approximately 5.30% per year on average, a rate that underperforms than approximately 55.85% of global competitors. The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, Valley National Bancorp's earnings increased by approximately 15.00% per year on average, a rate that underperforms than approximately 31.82% of global competitors. Lastly, the company's 5-year EBITDA growth rate of 16.20%, which underperforms than approximately 25.28% of global competitors.
Next Steps
In conclusion, while Valley National Bancorp's dividend payments have remained steady, the dividend growth rate has been negative over the past decade. However, with a moderate payout ratio and fair profitability, the company has maintained a balance between distributing earnings and retaining capital for growth. Considering the growth metrics, Valley National Bancorp shows a stable revenue model with a fair growth outlook, although it underperforms a significant portion of its global competitors. Investors should weigh these factors when assessing the future prospects of Valley National Bancorp's dividends. GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
This article first appeared on GuruFocus.
