Stock Analysis

Canadian Western Bank's (TSE:CWB) Upcoming Dividend Will Be Larger Than Last Year's

TSX:CWB
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Canadian Western Bank (TSE:CWB) will increase its dividend from last year's comparable payment on the 5th of January to CA$0.32. This makes the dividend yield about the same as the industry average at 5.3%.

View our latest analysis for Canadian Western Bank

Canadian Western Bank's Earnings Will Easily Cover The Distributions

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. Taking data from its last earnings report, calculating for the company's payout ratio shows 36%, which means that Canadian Western Bank would be able to pay its last dividend without pressure on the balance sheet.

The next 3 years are set to see EPS grow by 24.9%. The future payout ratio could be 35% over that time period, according to analyst estimates, which is a good look for the future of the dividend.

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TSX:CWB Historic Dividend December 6th 2022

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. Since 2012, the dividend has gone from CA$0.60 total annually to CA$1.28. This works out to be a compound annual growth rate (CAGR) of approximately 7.9% a year over that time. Companies like this can be very valuable over the long term, if the decent rate of growth can be maintained.

We Could See Canadian Western Bank's Dividend Growing

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Canadian Western Bank has seen EPS rising for the last five years, at 6.3% per annum. Canadian Western Bank definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

We Really Like Canadian Western Bank's Dividend

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. However, there are other things to consider for investors when analysing stock performance. For example, we've identified 2 warning signs for Canadian Western Bank (1 is concerning!) 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.