Western New England Bancorp (NASDAQ:WNEB) Is Paying Out A Larger Dividend Than Last Year
The board of Western New England Bancorp, Inc. (NASDAQ:WNEB) has announced that it will be paying its dividend of $0.07 on the 22nd of February, an increased payment from last year's comparable dividend. Despite this raise, the dividend yield of 2.9% is only a modest boost to shareholder returns.
See our latest analysis for Western New England Bancorp
Western New England Bancorp's Payment Expected To Have Solid Earnings Coverage
Even a low dividend yield can be attractive if it is sustained for years on end.
Western New England Bancorp has a long history of paying out dividends, with its current track record at a minimum of 10 years. Using data from its latest earnings report, Western New England Bancorp's payout ratio sits at 21%, an extremely comfortable number that shows that it can pay its dividend.
EPS is set to fall by 6.6% over the next 3 years. Fortunately, analysts forecast the future payout ratio to be 26% over the same time horizon, which is in the range that makes us comfortable with the sustainability of the dividend.
The company has a long dividend track record, but it doesn't look great with cuts in the past. Since 2013, the dividend has gone from $0.44 total annually to $0.28. This works out to be a decline of approximately 4.4% per year over that time. A company that decreases its dividend over time generally isn't what we are looking for.
The Dividend Looks Likely To Grow
Given that the dividend has been cut in the past, we need to check if earnings are growing and if that might lead to stronger dividends in the future. Western New England Bancorp has impressed us by growing EPS at 23% per year over the past five years. Earnings per share is growing at a solid clip, and the payout ratio is low which we think is an ideal combination in a dividend stock as the company can quite easily raise the dividend in the future.
We Really Like Western New England Bancorp's Dividend
Overall, a dividend increase is always good, and we think that Western New England Bancorp is a strong income stock thanks to its track record and growing earnings. The earnings easily cover the company's distributions, and the company is generating plenty of cash. However, it is worth noting that the earnings are expected to fall over the next year, which may not change the long term outlook, but could affect the dividend payment in the next 12 months. Taking this all into consideration, this looks like it could be a good dividend opportunity.
It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Just as an example, we've come across 3 warning signs for Western New England Bancorp you should be aware of, and 1 of them is concerning. Is Western New England Bancorp 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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