Auburn National Bancorporation, Inc.'s (NASDAQ:AUBN) investors are due to receive a payment of $0.265 per share on 26th of September. Based on this payment, the dividend yield on the company's stock will be 3.8%, which is an attractive boost to shareholder returns.
Auburn National Bancorporation's Payment Expected To Have Solid Earnings Coverage
We like to see robust dividend yields, but that doesn't matter if the payment isn't 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. Based on Auburn National Bancorporation's last earnings report, the payout ratio is at a decent 48%, meaning that the company is able to pay out its dividend with a bit of room to spare.
Looking forward, EPS could fall by 0.02% if the company can't turn things around from the last few years. If the dividend continues along the path it has been on recently, we estimate the future payout ratio could be 50%, which is definitely feasible to continue.
Auburn National Bancorporation Has A Solid Track Record
The company has an extended history of paying stable dividends. Since 2012, the annual payment back then was $0.80, compared to the most recent full-year payment of $1.06. This implies that the company grew its distributions at a yearly rate of about 2.9% over that duration. Dividends have grown relatively slowly, which is not great, but some investors may value the relative consistency of the dividend.
The Dividend's Growth Prospects Are Limited
Investors could be attracted to the stock based on the quality of its payment history. However, things aren't all that rosy. However, Auburn National Bancorporation's EPS was effectively flat over the past five years, which could stop the company from paying more every year.
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. Taking all of this into consideration, the dividend looks viable moving forward, but investors should be mindful that the company has pushed the boundaries of sustainability in the past and may do so again.
Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Case in point: We've spotted 2 warning signs for Auburn National Bancorporation (of which 1 doesn't sit too well with us!) you should know about. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.
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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.
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