Canadian Western Bank (TSE:CWB) Has Announced That It Will Be Increasing Its Dividend To CA$0.34

Canadian Western Bank (TSE:CWB) has announced that it will be increasing its dividend from last year's comparable payment on the 4th of January to CA$0.34. This makes the dividend yield about the same as the industry average at 4.4%.

Check out our latest analysis for Canadian Western Bank

Canadian Western Bank's Dividend Forecasted To Be Well Covered By Earnings

We like a dividend to be consistent over the long term, so checking whether it is sustainable is important.

Canadian Western Bank has a long history of paying out dividends, with its current track record at a minimum of 10 years. Taking data from its last earnings report, calculating for the company's payout ratio shows 39%, which means that Canadian Western Bank would be able to pay its last dividend without pressure on the balance sheet.

Looking forward, EPS is forecast to rise by 24.9% over the next 3 years. Analysts forecast the future payout ratio could be 36% over the same time horizon, which is a number we think the company can maintain.

Canadian Western Bank Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. Since 2013, the annual payment back then was CA$0.72, compared to the most recent full-year payment of CA$1.36. This means that it has been growing its distributions at 6.6% per annum over that time. 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.

The Dividend's Growth Prospects Are Limited

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. However, Canadian Western Bank has only grown its earnings per share at 3.7% per annum over the past five years. If Canadian Western Bank is struggling to find viable investments, it always has the option to increase its payout ratio to pay more to shareholders.

We Really Like Canadian Western Bank's Dividend

Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. 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.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Earnings growth generally bodes well for the future value of company dividend payments. See if the 8 Canadian Western Bank analysts we track are forecasting continued growth with our free report on analyst estimates for the company. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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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.