Yahoo Finance M&T Bank (NYSE:MTB) Is Increasing Its Dividend To $1.35
M&T Bank Corporation's (NYSE:MTB) periodic dividend will be increasing on the 28th of June to $1.35, with investors receiving 3.8% more than last year's $1.30. The payment will take the dividend yield to 3.5%, which is in line with the average for the industry.
Check out our latest analysis for M&T Bank
M&T Bank's Payment Expected To Have Solid Earnings Coverage
We aren't too impressed by dividend yields unless they can be sustained over time.
M&T Bank has a long history of paying out dividends, with its current track record at a minimum of 10 years. Based on M&T Bank's last earnings report, the payout ratio is at a decent 35%, meaning that the company is able to pay out its dividend with a bit of room to spare.
Looking forward, EPS is forecast to rise by 13.0% over the next 3 years. Analysts forecast the future payout ratio could be 35% over the same time horizon, which is a number we think the company can maintain.
M&T Bank Has A Solid Track Record
The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. Since 2014, the annual payment back then was $2.80, compared to the most recent full-year payment of $5.20. This works out to be a compound annual growth rate (CAGR) of approximately 6.4% a year over that time. Dividends have grown at a reasonable rate over this period, and without any major cuts in the payment over time, we think this is an attractive combination as it provides a nice boost to shareholder returns.
M&T Bank May Find It Hard To Grow The Dividend
Investors could be attracted to the stock based on the quality of its payment history. Although it's important to note that M&T Bank's earnings per share has basically not grown from where it was five years ago, which could erode the purchasing power of the dividend over time. While EPS growth is quite low, M&T Bank has the option to increase the payout ratio to return more cash to shareholders.
M&T Bank 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. Earnings are easily covering distributions, and the company is generating plenty of cash. 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. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Taking the debate a bit further, we've identified 1 warning sign for M&T Bank that investors need to be conscious of moving forward. 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.
