Auburn National Bancorporation's (NASDAQ:AUBN) Upcoming Dividend Will Be Larger Than Last Year's

Auburn National Bancorporation, Inc. (NASDAQ:AUBN) has announced that it will be increasing its periodic dividend on the 27th of March to $0.27, which will be 1.9% higher than last year's comparable payment amount of $0.265. This will take the dividend yield to an attractive 4.4%, providing a nice boost to shareholder returns.

View our latest analysis for Auburn National Bancorporation

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.

Auburn National Bancorporation has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. Taking data from its last earnings report, calculating for the company's payout ratio shows 36%, which means that Auburn National Bancorporation would be able to pay its last dividend without pressure on the balance sheet.

Over the next year, EPS could expand by 6.5% if recent trends continue. Assuming the dividend continues along recent trends, we think the future payout ratio could be 35% by next year, which is in a pretty sustainable range.

Auburn National Bancorporation Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2013, the annual payment back then was $0.82, compared to the most recent full-year payment of $1.06. This works out to be a compound annual growth rate (CAGR) of approximately 2.6% a year over that time. Although we can't deny that the dividend has been remarkably stable in the past, the growth has been pretty muted.

We Could See Auburn National Bancorporation's Dividend Growing

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. We are encouraged to see that Auburn National Bancorporation has grown earnings per share at 6.5% per year over the past five years. Auburn National Bancorporation definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

Auburn National Bancorporation Looks Like A Great Dividend Stock

Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. Earnings are easily covering distributions, and the company is generating plenty of cash. All of these factors considered, we think this has solid potential as a dividend stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. 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 significant) we think 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.