ACNB (NASDAQ:ACNB) Is Increasing Its Dividend To $0.32

ACNB Corporation (NASDAQ:ACNB) will increase its dividend from last year's comparable payment on the 14th of June to $0.32. This makes the dividend yield 3.9%, which is above the industry average.

View our latest analysis for ACNB

ACNB's Payment Expected To Have Solid Earnings Coverage

If the payments aren't sustainable, a high yield for a few years won't matter that much.

ACNB has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. Taking data from its last earnings report, calculating for the company's payout ratio shows 34%, which means that ACNB would be able to pay its last dividend without pressure on the balance sheet.

Looking forward, earnings per share is forecast to rise by 1.2% over the next year. If the dividend continues on this path, the future payout ratio could be 36% by next year, which we think can be pretty sustainable going forward.

ACNB 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 2014, the dividend has gone from $0.76 total annually to $1.28. This implies that the company grew its distributions at a yearly rate of about 5.4% over that duration. 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

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Unfortunately, ACNB's earnings per share has been essentially flat over the past five years, which means the dividend may not be increased each year. If ACNB is struggling to find viable investments, it always has the option to increase its payout ratio to pay more to shareholders.

ACNB Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that ACNB is a strong income stock thanks to its track record and growing earnings. 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.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Now, if you want to look closer, it would be worth checking out our free research on ACNB management tenure, salary, and performance. 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.