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Western New England Bancorp, Inc. (NASDAQ:WNEB) will pay a dividend of $0.07 on the 26th of February. Based on this payment, the dividend yield will be 3.0%, which is fairly typical for the industry.
See our latest analysis for Western New England Bancorp
Western New England Bancorp's Payment Expected To Have Solid Earnings Coverage
We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue.
Western New England Bancorp has a long history of paying out dividends, with its current track record at a minimum of 10 years. Past distributions do not necessarily guarantee future ones, but Western New England Bancorp's payout ratio of 50% is a good sign as this means that earnings decently cover dividends.
Over the next 3 years, EPS is forecast to expand by 36.5%. Analysts forecast the future payout ratio could be 40% over the same time horizon, which is a number we think the company can maintain.
Dividend Volatility
The company's dividend history has been marked by instability, with at least one cut in the last 10 years. Since 2015, the annual payment back then was $0.24, compared to the most recent full-year payment of $0.28. This works out to be a compound annual growth rate (CAGR) of approximately 1.6% a year over that time. Modest growth in the dividend is good to see, but we think this is offset by historical cuts to the payments. It is hard to live on a dividend income if the company's earnings are not consistent.
The Dividend's Growth Prospects Are Limited
Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. However, Western New England Bancorp's EPS was effectively flat over the past five years, which could stop the company from paying more every year. Growth of 1.9% may indicate that the company has limited investment opportunity so it is returning its earnings to shareholders instead. This isn't necessarily bad, but we wouldn't expect rapid dividend growth in the future.
Our Thoughts On Western New England Bancorp's Dividend
Overall, a consistent dividend is a good thing, and we think that Western New England Bancorp has the ability to continue this into the future. The dividend has been at reasonable levels historically, but that hasn't translated into a consistent payment. The dividend looks okay, but there have been some issues in the past, so we would be a little bit cautious.
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. For example, we've picked out 1 warning sign for Western New England Bancorp that investors should know about before committing capital to this stock. Is Western New England Bancorp 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.