Auburn National Bancorporation (NASDAQ:AUBN) Has Affirmed Its Dividend Of $0.27

Auburn National Bancorporation, Inc.'s (NASDAQ:AUBN) investors are due to receive a payment of $0.27 per share on 26th of December. This makes the dividend yield 4.3%, which will augment investor returns quite nicely.

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Auburn National Bancorporation's Payment Expected To Have Solid Earnings Coverage

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable.

Having distributed dividends for at least 10 years, Auburn National Bancorporation has a long history of paying out a part of its earnings to shareholders. Past distributions do not necessarily guarantee future ones, but Auburn National Bancorporation's payout ratio of 53% is a good sign as this means that earnings decently cover dividends.

EPS is set to fall by 2.0% over the next 12 months if recent trends continue. If the dividend continues along the path it has been on recently, we estimate the future payout ratio could be 55%, which is definitely feasible to continue.

View our latest analysis for Auburn National Bancorporation

Auburn National Bancorporation Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. The dividend has gone from an annual total of $0.88 in 2015 to the most recent total annual payment of $1.08. This works out to be a compound annual growth rate (CAGR) of approximately 2.1% a year over that time. While the consistency in the dividend payments is impressive, we think the relatively slow rate of growth is less attractive.

Auburn National Bancorporation May Find It Hard To Grow The Dividend

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Let's not jump to conclusions as things might not be as good as they appear on the surface. It's not great to see that Auburn National Bancorporation's earnings per share has fallen at approximately 2.0% per year over the past five years. A modest decline in earnings isn't great, and it makes it quite unlikely that the dividend will grow in the future unless that trend can be reversed.

Our Thoughts On Auburn National Bancorporation's Dividend

Overall, we think Auburn National Bancorporation is a solid choice as a dividend stock, even though the dividend wasn't raised this year. With shrinking earnings, the company may see some issues maintaining the dividend even though they look pretty sustainable for now. The dividend looks okay, but there have been some issues in the past, so we would be a little bit cautious.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. To that end, Auburn National Bancorporation has 2 warning signs (and 1 which is a bit concerning) we think you should know about. 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.