The board of Western New England Bancorp, Inc.( NASDAQ:WNEB ) has announced that it will pay a dividend of $0.07 per share on the 25th of February. Including this payment, the dividend yield on the stock will be 2.1%, which is a modest boost for shareholders' returns.
Western New England Bancorp's Dividend Forecasted To Be Well Covered By Earnings
The dividend yield is a little bit low, but sustainability of the payments is also an important part of evaluating an income stock.
Western New England Bancorp has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. Past distributions do not necessarily guarantee future ones, but Western New England Bancorp's payout ratio of 37% is a good sign as this means that earnings decently cover dividends.
The next 3 years are set to see EPS grow by 60.4%. The future payout ratio could be 26% over that time period, according to analyst estimates, which is a good look for the future of the dividend.
View our latest analysis for Western New England Bancorp
Western New England Bancorp Has A Solid Track Record
Even over a long history of paying dividends, the company's distributions have been remarkably stable. The annual payment during the last 10 years was $0.12 in 2016, and the most recent fiscal year payment was $0.28. This implies that the company grew its distributions at a yearly rate of about 8.8% over that duration. The growth of the dividend has been pretty reliable, so we think this can offer investors some nice additional income in their portfolio.
The Dividend Looks Likely To Grow
The company's investors will be pleased to have been receiving dividend income for some time. Western New England Bancorp has impressed us by growing EPS at 11% per year over the past five years. Growth in EPS bodes well for the dividend, as does the low payout ratio that the company is currently reporting.
We Really Like Western New England Bancorp's Dividend
Overall, we like to see the dividend staying consistent, and we think Western New England Bancorp might even raise payments in the future. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. All of these factors considered, we think this has solid potential as a dividend stock.
Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. See if management have their own wealth at stake, by checking insider shareholdings in Western New England Bancorp stock. 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.
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