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City Holding Company's (NASDAQ:CHCO) investors are due to receive a payment of $0.79 per share on 30th of April. This makes the dividend yield about the same as the industry average at 2.7%.

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City Holding's Dividend Forecasted To Be Well Covered By Earnings

We aren't too impressed by dividend yields unless they can be sustained over time.

City Holding 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 City Holding's payout ratio of 38% is a good sign as this means that earnings decently cover dividends.

EPS is set to fall by 0.8% over the next 3 years. Despite that, analysts estimate the future payout ratio could be 42% over the same time period, which is in a pretty comfortable range.

View our latest analysis for City Holding

City Holding Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. Since 2015, the dividend has gone from $1.60 total annually to $3.16. This implies that the company grew its distributions at a yearly rate of about 7.0% over that duration. 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.

City Holding Could Grow Its Dividend

The company's investors will be pleased to have been receiving dividend income for some time. It's encouraging to see that City Holding has been growing its earnings per share at 7.8% a year over the past five years. City Holding definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

City Holding Looks Like A Great Dividend Stock

Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. The earnings easily cover the company's distributions, and the company is generating plenty of cash. However, it is worth noting that the earnings are expected to fall over the next year, which may not change the long term outlook, but could affect the dividend payment in the next 12 months. All in all, this checks a lot of the boxes we look for when choosing an income stock.