Ames National (NASDAQ:ATLO) Is Paying Out A Dividend Of $0.27

Ames National Corporation (NASDAQ:ATLO) will pay a dividend of $0.27 on the 15th of May. This makes the dividend yield 5.3%, which will augment investor returns quite nicely.

View our latest analysis for Ames National

Ames National's Earnings Will Easily Cover The Distributions

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

Ames National 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 Ames National's payout ratio of 51% is a good sign as this means that earnings decently cover dividends.

Looking forward, earnings per share could rise by 7.8% over the next year if the trend from the last few years continues. If the dividend continues on this path, the future payout ratio could be 49% by next year, which we think can be pretty sustainable going forward.

Ames National Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. The dividend has gone from an annual total of $0.60 in 2013 to the most recent total annual payment of $1.08. This implies that the company grew its distributions at a yearly rate of about 6.1% 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.

We Could See Ames National's Dividend Growing

The company's investors will be pleased to have been receiving dividend income for some time. We are encouraged to see that Ames National has grown earnings per share at 7.8% per year over the past five years. Since earnings per share is growing at an acceptable rate, and the payout policy is balanced, we think the company is positioning itself well to grow earnings and dividends in the future.

We Really Like Ames National's Dividend

In summary, it is good to see that the dividend is staying consistent, and we don't think there is any reason to suspect this might change over the medium term. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All of these factors considered, we think this has solid potential as a dividend stock.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. You can also discover whether shareholders are aligned with insider interests by checking our visualisation of insider shareholdings and trades in Ames National stock. 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.