AmeriServ Financial (NASDAQ:ASRV) Is Paying Out A Dividend Of $0.03

AmeriServ Financial, Inc. (NASDAQ:ASRV) will pay a dividend of $0.03 on the 20th of November. This payment means that the dividend yield will be 4.7%, which is around the industry average.

See our latest analysis for AmeriServ Financial

AmeriServ Financial's Dividend Forecasted To Be Well Covered By Earnings

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

AmeriServ Financial has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. Based on AmeriServ Financial's last earnings report, the payout ratio is at a decent 70%, meaning that the company is able to pay out its dividend with a bit of room to spare.

EPS is set to fall by 8.7% over the next 12 months if recent trends continue. However, if the dividend continues along recent trends, we estimate the future payout ratio could reach 88%, meaning that most of the company's earnings is being paid out to shareholders.

AmeriServ Financial Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2013, the dividend has gone from $0.04 total annually to $0.12. This means that it has been growing its distributions at 12% per annum over that time. It is good to see that there has been strong dividend growth, and that there haven't been any cuts for a long time.

Dividend Growth Is Doubtful

Investors could be attracted to the stock based on the quality of its payment history. Let's not jump to conclusions as things might not be as good as they appear on the surface. In the last five years, AmeriServ Financial's earnings per share has shrunk at approximately 8.7% per annum. If the company is making less over time, it naturally follows that it will also have to pay out less in dividends.

In Summary

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about AmeriServ Financial's payments, as there could be some issues with sustaining them into the future. The low payout ratio is a redeeming feature, but generally we are not too happy with the payments AmeriServ Financial has been making. Overall, we don't think this company has the makings of a good income stock.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For example, we've identified 3 warning signs for AmeriServ Financial (1 doesn't sit too well with us!) that you should be aware of before investing. If you are a dividend investor, you might also want to look at our curated list of high yield 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.