Western Alliance Bancorporation's (NYSE:WAL) Shareholders Will Receive A Bigger Dividend Than Last Year
The board of Western Alliance Bancorporation (NYSE:WAL) has announced that it will be increasing its dividend by 2.8% on the 1st of December to $0.37, up from last year's comparable payment of $0.36. This takes the annual payment to 3.1% of the current stock price, which is about average for the industry.
Check out our latest analysis for Western Alliance Bancorporation
Western Alliance Bancorporation's Payment Expected To Have Solid Earnings Coverage
We aren't too impressed by dividend yields unless they can be sustained over time.
Western Alliance Bancorporation is just starting to establish itself as being able to pay dividends to shareholders, given its short 4-year history of distributing earnings. Despite the company's shorter dividend history however, calculating for its payout ratio of 18% shows that Western Alliance Bancorporation is able to comfortably pay dividends.
The next 3 years are set to see EPS grow by 28.7%. Analysts forecast the future payout ratio could be 17% over the same time horizon, which is a number we think the company can maintain.
Western Alliance Bancorporation Doesn't Have A Long Payment History
The company has maintained a consistent dividend for a few years now, but we would like to see a longer track record before relying on it. Since 2019, the annual payment back then was $1.00, compared to the most recent full-year payment of $1.44. This implies that the company grew its distributions at a yearly rate of about 9.5% over that duration. The dividend has been growing as a reasonable rate, which we like. However, investors will probably want to see a longer track record before they consider Western Alliance Bancorporation to be a consistent dividend paying stock.
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. We are encouraged to see that Western Alliance Bancorporation has grown earnings per share at 15% per year over the past five years. A low payout ratio and decent growth suggests that the company is reinvesting well, and it also has plenty of room to increase the dividend over time.
Western Alliance Bancorporation Looks Like A Great Dividend Stock
In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. 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 of these factors considered, we think this has solid potential as a dividend stock.
Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For instance, we've picked out 1 warning sign for Western Alliance Bancorporation that investors should take into consideration. If you are a dividend investor, you might also want to look at our curated list of high yield 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.
