Westamerica Bancorp's Dividend Analysis
Exploring the Dividend Sustainability of Westamerica Bancorp (NASDAQ:WABC)
Westamerica Bancorp (NASDAQ:WABC) recently announced a dividend of $0.44 per share, payable on 2024-02-16, with the ex-dividend date set for 2024-02-02. 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 Westamerica Bancorp's dividend performance and assess its sustainability.
What Does Westamerica Bancorp Do?
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Westamerica Bancorp is based in San Rafael, California. Westamerica Bancorporation runs a regional community bank and has approximately $7.5 billion in assets. The bank's net revenue is generated by net interest income. Deposit service charges make up the noninterest income sources. The bank focuses mostly on commercial clients, such as smaller businesses. Its footprint encompasses central and northern California, extending north of San Francisco to Mendocino and Lake counties, south to Kern County in central California, and all the way east to Nevada County.
A Glimpse at Westamerica Bancorp's Dividend History
Westamerica Bancorp has maintained a consistent dividend payment record since 1985. Dividends are currently distributed on a quarterly basis. Westamerica Bancorp has increased its dividend each year since 1985. The stock is thus listed as a dividend aristocrat, an honor that is given to companies that have increased their dividend each year for at least the past 39 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Westamerica Bancorp's Dividend Yield and Growth
As of today, Westamerica Bancorp currently has a 12-month trailing dividend yield of 3.66% and a 12-month forward dividend yield of 3.75%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, Westamerica Bancorp's annual dividend growth rate was 1.00%. Extended to a five-year horizon, this rate increased to 1.30% per year. And over the past decade, Westamerica Bancorp's annual dividends per share growth rate stands at 1.30%. Based on Westamerica Bancorp's dividend yield and five-year growth rate, the 5-year yield on cost of Westamerica Bancorp stock as of today is approximately 3.90%.
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 2023-12-31, Westamerica Bancorp's dividend payout ratio is 0.28.
Westamerica Bancorp's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Westamerica Bancorp's profitability 5 out of 10 as of 2023-12-31, suggesting fair profitability. The company has reported positive net income for each 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. Westamerica 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 Westamerica Bancorp's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Westamerica Bancorp's revenue has increased by approximately 9.20% per year on average, a rate that outperforms approximately 64.08% 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, Westamerica Bancorp's earnings increased by approximately 14.90% per year on average, a rate that outperforms approximately 67.12% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 14.70%, which outperforms approximately 71.22% of global competitors.
Next Steps
In conclusion, Westamerica Bancorp's consistent dividend payments, modest dividend growth rate, manageable payout ratio, and solid profitability metrics paint a picture of a reliable income stock. The growth metrics, while not stellar, suggest a stable outlook that supports the continuation of dividend payments. As value investors consider the strength of Westamerica Bancorp's dividend, they should weigh these factors to determine if the stock aligns with their investment goals and income needs. Will Westamerica Bancorp continue its legacy as a dividend aristocrat in the years to come? This remains an important question for investors seeking sustainable income streams in their portfolios.
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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.
