City Union Bank (NSE:CUB) Is Paying Out A Dividend Of ₹1.00

City Union Bank Limited's (NSE:CUB) investors are due to receive a payment of ₹1.00 per share on 22nd of September. The dividend yield is 0.8% based on this payment, which is a little bit low compared to the other companies in the industry.

View our latest analysis for City Union Bank

City Union Bank's Payment Expected To Have Solid Earnings Coverage

The dividend yield is a little bit low, but sustainability of the payments is also an important part of evaluating an income stock.

City Union Bank has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. While past records don't necessarily translate into future results, the company's payout ratio of 7.9% also shows that City Union Bank is able to comfortably pay dividends.

Looking forward, EPS is forecast to rise by 38.5% over the next 3 years. Analysts forecast the future payout ratio could be 7.0% 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. The annual payment during the last 10 years was ₹1.65 in 2013, and the most recent fiscal year payment was ₹1.00. The dividend has shrunk at around 4.9% a year during that period. A company that decreases its dividend over time generally isn't what we are looking for.

City Union Bank Could Grow Its Dividend

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. City Union Bank has impressed us by growing EPS at 8.1% per year over the past five years. 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.

We Really Like City Union Bank's Dividend

Overall, we like to see the dividend staying consistent, and we think City Union Bank might even raise payments in the future. Distributions are quite easily covered by earnings, which are also being converted to cash flows. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Taking the debate a bit further, we've identified 2 warning signs for City Union Bank that investors need to be conscious of moving forward. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.