Over the past 10 years TowneBank (NASDAQ:TOWN) has returned an average of 2.00% per year from dividend payouts. The stock currently pays out a dividend yield of 1.96%, and has a market cap of US$2.06B. Let’s dig deeper into whether TowneBank should have a place in your portfolio. Check out our latest analysis for TowneBank
5 questions to ask before buying a dividend stock
Whenever I am looking at a potential dividend stock investment, I always check these five metrics:
- Is its annual yield among the top 25% of dividend-paying companies?
- Has it paid dividend every year without dramatically reducing payout in the past?
- Has dividend per share risen in the past couple of years?
- Is its earnings sufficient to payout dividend at the current rate?
- Will it have the ability to keep paying its dividends going forward?
How does TowneBank fare?
The current trailing twelve-month payout ratio for the stock is 39.01%, meaning the dividend is sufficiently covered by earnings. However, going forward, analysts expect TOWN’s payout to fall to 32.76% of its earnings, which leads to a dividend yield of 2.34%. However, EPS should increase to $1.98, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment. If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. TOWN has increased its DPS from $0.31 to $0.56 in the past 10 years. During this period it has not missed a payment, as one would expect for a company increasing its dividend. These are all positive signs of a great, reliable dividend stock. Relative to peers, TowneBank produces a yield of 1.96%, which is on the low-side for Banks stocks.
Taking into account the dividend metrics, TowneBank ticks most of the boxes as a strong dividend investment, putting it in my list of top dividend payers. Given that this is purely a dividend analysis, I recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. Below, I’ve compiled three relevant aspects you should look at:
- Future Outlook: What are well-informed industry analysts predicting for TOWN’s future growth? Take a look at our free research report of analyst consensus for TOWN’s outlook.
- Valuation: What is TOWN worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether TOWN is currently mispriced by the market.
- Other Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.