ACNB (NASDAQ:ACNB) Is Increasing Its Dividend To $0.38

The board of ACNB Corporation (NASDAQ:ACNB) has announced that it will be paying its dividend of $0.38 on the 15th of December, an increased payment from last year's comparable dividend. Based on this payment, the dividend yield for the company will be 3.1%, which is fairly typical for the industry.

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ACNB's Dividend Forecasted To Be Well Covered By Earnings

We aren't too impressed by dividend yields unless they can be sustained over time.

ACNB has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. Past distributions do not necessarily guarantee future ones, but ACNB's payout ratio of 39% is a good sign as this means that earnings decently cover dividends.

Over the next 3 years, EPS is forecast to expand by 66.1%. The future payout ratio could be 32% over that time period, according to analyst estimates, which is a good look for the future of the dividend.

See our latest analysis for ACNB

ACNB Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. The annual payment during the last 10 years was $0.80 in 2015, and the most recent fiscal year payment was $1.36. This implies that the company grew its distributions at a yearly rate of about 5.4% over that duration. The dividend has been growing very nicely for a number of years, and has given its shareholders some nice income in their portfolios.

ACNB Could Grow Its Dividend

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. We are encouraged to see that ACNB has grown earnings per share at 9.6% per year over the past five years. ACNB definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

An additional note is that the company has been raising capital by issuing stock equal to 22% of shares outstanding in the last 12 months. Trying to grow the dividend when issuing new shares reminds us of the ancient Greek tale of Sisyphus - perpetually pushing a boulder uphill. Companies that consistently issue new shares are often suboptimal from a dividend perspective.

We Really Like ACNB's Dividend

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. All in all, this checks a lot of the boxes we look for when choosing an income stock.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. However, there are other things to consider for investors when analysing stock performance. As an example, we've identified 2 warning signs for ACNB that you should be aware of before investing. Is ACNB not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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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.