Webster Financial (NYSE:WBS) Has Affirmed Its Dividend Of $0.40
Webster Financial Corporation's (NYSE:WBS) investors are due to receive a payment of $0.40 per share on 17th of February. Based on this payment, the dividend yield will be 3.1%, which is fairly typical for the industry.
View our latest analysis for Webster Financial
Webster Financial's Payment Expected To Have Solid Earnings Coverage
We aren't too impressed by dividend yields unless they can be sustained over time.
Webster Financial has a long history of paying out dividends, with its current track record at a minimum of 10 years. Taking data from its last earnings report, calculating for the company's payout ratio shows 43%, which means that Webster Financial would be able to pay its last dividend without pressure on the balance sheet.
The next 3 years are set to see EPS grow by 117.8%. The future payout ratio could be 25% over that time period, according to analyst estimates, which is a good look for the future of the dividend.
Webster Financial Has A Solid Track Record
The company has an extended history of paying stable dividends. Since 2013, the annual payment back then was $0.40, compared to the most recent full-year payment of $1.60. This means that it has been growing its distributions at 15% per annum over that time. So, dividends have been growing pretty quickly, and even more impressively, they haven't experienced any notable falls during this period.
We Could See Webster Financial's Dividend Growing
Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Webster Financial has impressed us by growing EPS at 6.1% per year over the past five years. Since earnings per share is growing at an acceptable rate, and the payout policy is balanced, we think the company is positioning itself well to grow earnings and dividends in the future.
We should note that Webster Financial has issued stock equal to 92% of shares outstanding. Trying to grow the dividend when issuing new shares reminds us of the ancient Greek tale of Sisyphus - perpetually pushing a boulder uphill. Companies that consistently issue new shares are often suboptimal from a dividend perspective.
We Really Like Webster Financial's Dividend
In summary, it is good to see that the dividend is staying consistent, and we don't think there is any reason to suspect this might change over the medium term. 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. Taking this all into consideration, this looks like it could be a good dividend opportunity.
Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. As an example, we've identified 1 warning sign for Webster Financial that you should be aware of before investing. Is Webster Financial not quite the opportunity you were looking for? Why not check out our selection of top 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.
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