Yahoo Finance TowneBank's (NASDAQ:TOWN) Dividend Will Be $0.25
The board of TowneBank (NASDAQ:TOWN) has announced that it will pay a dividend on the 12th of July, with investors receiving $0.25 per share. Based on this payment, the dividend yield will be 3.8%, which is fairly typical for the industry.
View our latest analysis for TowneBank
TowneBank's Earnings Will Easily Cover The Distributions
We aren't too impressed by dividend yields unless they can be sustained over time.
Having distributed dividends for at least 10 years, TowneBank has a long history of paying out a part of its earnings to shareholders. Based on TowneBank's last earnings report, the payout ratio is at a decent 50%, meaning that the company is able to pay out its dividend with a bit of room to spare.
Looking forward, earnings per share is forecast to rise by 12.7% over the next year. If the dividend continues along recent trends, we estimate the future payout ratio will be 48%, which is in the range that makes us comfortable with the sustainability of the dividend.
TowneBank 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. The annual payment during the last 10 years was $0.40 in 2014, and the most recent fiscal year payment was $1.00. This means that it has been growing its distributions at 9.6% per annum over that time. The growth of the dividend has been pretty reliable, so we think this can offer investors some nice additional income in their portfolio.
TowneBank May Find It Hard To Grow The Dividend
Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Although it's important to note that TowneBank'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. The company has been growing at a pretty soft 0.7% per annum, and is paying out quite a lot of its earnings to shareholders. This isn't bad in itself, but unless earnings growth pick up we wouldn't expect dividends to grow either.
We Really Like TowneBank'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. Earnings are easily covering distributions, and the company is generating plenty of cash. All in all, this checks a lot of the boxes we look for when choosing an income stock.
Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. However, there are other things to consider for investors when analysing stock performance. Companies that are growing earnings tend to be the best dividend stocks over the long term. See what the 5 analysts we track are forecasting for TowneBank for free with public analyst estimates for the company. Is TowneBank 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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