Be Sure To Check Out Arrow Financial Corporation (NASDAQ:AROW) Before It Goes Ex-Dividend

Arrow Financial Corporation (NASDAQ:AROW) is about to trade ex-dividend in the next 4 days. If you purchase the stock on or after the 1st of March, you won't be eligible to receive this dividend, when it is paid on the 15th of March.

Arrow Financial's next dividend payment will be US$0.26 per share, and in the last 12 months, the company paid a total of US$1.04 per share. Based on the last year's worth of payments, Arrow Financial has a trailing yield of 3.2% on the current stock price of $32.09. If you buy this business for its dividend, you should have an idea of whether Arrow Financial's dividend is reliable and sustainable. So we need to investigate whether Arrow Financial can afford its dividend, and if the dividend could grow.

See our latest analysis for Arrow Financial

Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. Arrow Financial paid out a comfortable 39% of its profit last year.

Companies that pay out less in dividends than they earn in profits generally have more sustainable dividends. The lower the payout ratio, the more wiggle room the business has before it could be forced to cut the dividend.

Click here to see how much of its profit Arrow Financial paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. If earnings fall far enough, the company could be forced to cut its dividend. This is why it's a relief to see Arrow Financial earnings per share are up 9.9% per annum over the last five years.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Since the start of our data, 10 years ago, Arrow Financial has lifted its dividend by approximately 3.3% a year on average. We're glad to see dividends rising alongside earnings over a number of years, which may be a sign the company intends to share the growth with shareholders.

The Bottom Line

Has Arrow Financial got what it takes to maintain its dividend payments? Arrow Financial has seen its earnings per share grow slowly in recent years, and the company reinvests more than half of its profits in the business, which generally bodes well for its future prospects. In summary, Arrow Financial appears to have some promise as a dividend stock, and we'd suggest taking a closer look at it.

Want to learn more about Arrow Financial? Here's a visualisation of its historical rate of revenue and earnings growth.

If you're in the market for dividend stocks, we recommend checking our list of top dividend stocks with a greater than 2% yield and an upcoming dividend.

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This article by Simply Wall St is general in nature. 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.
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