Yahoo Finance CapStar Financial Holdings (NASDAQ:CSTR) Has Affirmed Its Dividend Of $0.11
CapStar Financial Holdings, Inc. (NASDAQ:CSTR) will pay a dividend of $0.11 on the 24th of May. This means the dividend yield will be fairly typical at 3.4%.
Check out our latest analysis for CapStar Financial Holdings
CapStar Financial Holdings' Payment Expected To Have Solid Earnings Coverage
We aren't too impressed by dividend yields unless they can be sustained over time.
CapStar Financial Holdings has established itself as a dividend paying company, given its 5-year history of distributing earnings to shareholders. Taking data from its last earnings report, calculating for the company's payout ratio of 26%shows that CapStar Financial Holdings would be able to pay its last dividend without pressure on the balance sheet.
The next year is set to see EPS grow by 3.6%. If the dividend continues along recent trends, we estimate the future payout ratio will be 31%, which is in the range that makes us comfortable with the sustainability of the dividend.
CapStar Financial Holdings Is Still Building Its Track Record
The dividend's track record has been pretty solid, but with only 5 years of history we want to see a few more years of history before making any solid conclusions. Since 2018, the dividend has gone from $0.16 total annually to $0.44. This means that it has been growing its distributions at 22% per annum over that time. The dividend has been growing rapidly, however with such a short payment history we can't know for sure if payment can continue to grow over the long term, so caution may be warranted.
The Dividend Looks Likely To Grow
Investors could be attracted to the stock based on the quality of its payment history. It's encouraging to see that CapStar Financial Holdings has been growing its earnings per share at 34% a year over the past five years. A low payout ratio gives the company a lot of flexibility, and growing earnings also make it very easy for it to grow the dividend.
We Really Like CapStar Financial Holdings' Dividend
Overall, we like to see the dividend staying consistent, and we think CapStar Financial Holdings might even raise payments in the future. Earnings are easily covering distributions, and the company is generating plenty of cash. Taking this all into consideration, this looks like it could be a good dividend opportunity.
Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. However, there are other things to consider for investors when analysing stock performance. For example, we've picked out 1 warning sign for CapStar Financial Holdings that investors should know about before committing capital to this stock. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.
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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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