Yahoo Finance Amalgamated Financial's (NASDAQ:AMAL) Shareholders Will Receive A Bigger Dividend Than Last Year
The board of Amalgamated Financial Corp. (NASDAQ:AMAL) has announced that it will be increasing its dividend by 20% on the 22nd of May to $0.12, up from last year's comparable payment of $0.10. Although the dividend is now higher, the yield is only 1.6%, which is below the industry average.
See our latest analysis for Amalgamated Financial
Amalgamated Financial's Dividend Forecasted To Be Well Covered By Earnings
It would be nice for the yield to be higher, but we should also check if higher levels of dividend payment would be sustainable.
Amalgamated Financial has established itself as a dividend paying company, given its 5-year history of distributing earnings to shareholders. While past records don't necessarily translate into future results, the company's payout ratio of 13% also shows that Amalgamated Financial is able to comfortably pay dividends.
Over the next year, EPS is forecast to expand by 2.9%. If the dividend continues along recent trends, we estimate the future payout ratio will be 17%, which is in the range that makes us comfortable with the sustainability of the dividend.
Amalgamated Financial Is Still Building Its Track Record
Amalgamated Financial's dividend has been pretty stable for a little while now, but we will continue to be cautious until it has been demonstrated for a few more years. The dividend has gone from an annual total of $0.24 in 2019 to the most recent total annual payment of $0.40. This works out to be a compound annual growth rate (CAGR) of approximately 11% a year 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
Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. We are encouraged to see that Amalgamated Financial has grown earnings per share at 15% per year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for Amalgamated Financial's prospects of growing its dividend payments in the future.
Amalgamated Financial Looks Like A Great Dividend Stock
Overall, a dividend increase is always good, and we think that Amalgamated Financial is a strong income stock thanks to its track record and growing earnings. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All of these factors considered, we think this has solid potential as a dividend stock.
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. As an example, we've identified 1 warning sign for Amalgamated Financial that you should be aware of before investing. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.
