Auburn National Bancorporation (NASDAQ:AUBN) Has Announced A Dividend Of $0.27

The board of Auburn National Bancorporation, Inc. (NASDAQ:AUBN) has announced that it will pay a dividend of $0.27 per share on the 25th of June. This makes the dividend yield 5.4%, which will augment investor returns quite nicely.

Our free stock report includes 2 warning signs investors should be aware of before investing in Auburn National Bancorporation. Read for free now.

Auburn National Bancorporation's Dividend Forecasted To Be Well Covered By Earnings

A big dividend yield for a few years doesn't mean much if it can't be sustained.

Auburn National Bancorporation has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. Based on Auburn National Bancorporation's last earnings report, the payout ratio is at a decent 58%, meaning that the company is able to pay out its dividend with a bit of room to spare.

Unless the company can turn things around, EPS could fall by 5.7% over the next year. If the dividend continues along the path it has been on recently, we estimate the future payout ratio could be 63%, which is definitely feasible to continue.

Check out our latest analysis for Auburn National Bancorporation

Auburn National Bancorporation Has A Solid Track Record

The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. The dividend has gone from an annual total of $0.86 in 2015 to the most recent total annual payment of $1.08. This implies that the company grew its distributions at a yearly rate of about 2.3% over that duration. Although we can't deny that the dividend has been remarkably stable in the past, the growth has been pretty muted.

Dividend Growth May Be Hard To Come By

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. However, initial appearances might be deceiving. It's not great to see that Auburn National Bancorporation's earnings per share has fallen at approximately 5.7% per year over the past five years. If earnings continue declining, the company may have to make the difficult choice of reducing the dividend or even stopping it completely - the opposite of dividend growth.

In Summary

Overall, a consistent dividend is a good thing, and we think that Auburn National Bancorporation has the ability to continue this into the future. The earnings coverage is acceptable for now, but with earnings on the decline we would definitely keep an eye on the payout ratio. The dividend looks okay, but there have been some issues in the past, so we would be a little bit cautious.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. To that end, Auburn National Bancorporation has 2 warning signs (and 1 which is a bit concerning) we think you should know about. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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