Cathay General Bancorp (NASDAQ:CATY) Is Due To Pay A Dividend Of $0.34

Cathay General Bancorp (NASDAQ:CATY) has announced that it will pay a dividend of $0.34 per share on the 11th of December. This means that the annual payment will be 2.8% of the current stock price, which is in line with the average for the industry.

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Cathay General Bancorp's Payment Expected To Have Solid Earnings Coverage

While it is always good to see a solid dividend yield, we should also consider whether the payment is feasible.

Having distributed dividends for at least 10 years, Cathay General Bancorp has a long history of paying out a part of its earnings to shareholders. Using data from its latest earnings report, Cathay General Bancorp's payout ratio sits at 7.8%, an extremely comfortable number that shows that it can pay its dividend.

Looking forward, EPS is forecast to rise by 39.1% over the next 3 years. Analysts estimate the future payout ratio will be 26% over the same time period, which is in the range that makes us comfortable with the sustainability of the dividend.

View our latest analysis for Cathay General Bancorp

Cathay General Bancorp 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 $0.40 in 2015 to the most recent total annual payment of $1.36. This works out to be a compound annual growth rate (CAGR) of approximately 13% a year over that time. It is good to see that there has been strong dividend growth, and that there haven't been any cuts for a long time.

We Could See Cathay General Bancorp's Dividend Growing

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. It's encouraging to see that Cathay General Bancorp has been growing its earnings per share at 9.6% a year over the past five years. Growth in EPS bodes well for the dividend, as does the low payout ratio that the company is currently reporting.

We Really Like Cathay General Bancorp's Dividend

Overall, we like to see the dividend staying consistent, and we think Cathay General Bancorp might even raise payments in the future. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. All in all, this checks a lot of the boxes we look for when choosing an income 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. As an example, we've identified 1 warning sign for Cathay General Bancorp that you should be aware of before investing. 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.