Stock Analysis

Canadian Western Bank (TSE:CWB) Will Pay A Larger Dividend Than Last Year At CA$0.32

TSX:CWB
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Canadian Western Bank (TSE:CWB) will increase its dividend from last year's comparable payment on the 23rd of March to CA$0.32. Based on this payment, the dividend yield for the company will be 4.8%, which is fairly typical for the industry.

View our latest analysis for Canadian Western Bank

Canadian Western Bank's Payment Expected To Have Solid Earnings Coverage

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

Having distributed dividends for at least 10 years, Canadian Western Bank has a long history of paying out a part of its earnings to shareholders. Past distributions do not necessarily guarantee future ones, but Canadian Western Bank's payout ratio of 36% is a good sign as this means that earnings decently cover dividends.

The next year is set to see EPS grow by 7.4%. If the dividend continues on this path, the future payout ratio could be 37% by next year, which we think can be pretty sustainable going forward.

historic-dividend
TSX:CWB Historic Dividend March 7th 2023

Canadian Western Bank Has A Solid Track Record

The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. The dividend has gone from an annual total of CA$0.64 in 2013 to the most recent total annual payment of CA$1.28. This works out to be a compound annual growth rate (CAGR) of approximately 7.2% a year over that time. The growth of the dividend has been pretty reliable, so we think this can offer investors some nice additional income in their portfolio.

We Could See Canadian Western Bank's Dividend Growing

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Canadian Western Bank has seen EPS rising for the last five years, at 5.1% per annum. A low payout ratio and decent growth suggests that the company is reinvesting well, and it also has plenty of room to increase the dividend over time.

Canadian Western Bank Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that Canadian Western Bank is a strong income stock thanks to its track record and growing earnings. 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. Taking this all into consideration, this looks like it could be a good dividend opportunity.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For example, we've identified 2 warning signs for Canadian Western Bank (1 is a bit unpleasant!) that you should be aware of before investing. 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.