Cathay General Bancorp (NASDAQ:CATY) Is Paying Out A Dividend Of $0.34

Cathay General Bancorp (NASDAQ:CATY) will pay a dividend of $0.34 on the 9th of June. This means that the annual payment will be 4.4% of the current stock price, which is in line with the average for the industry.

See our latest analysis for Cathay General Bancorp

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.

Cathay General Bancorp has a long history of paying out dividends, with its current track record at a minimum of 10 years. Using data from its latest earnings report, Cathay General Bancorp's payout ratio sits at 20%, an extremely comfortable number that shows that it can pay its dividend.

Over the next year, EPS is forecast to fall by 5.7%. But assuming the dividend continues along recent trends, we believe the future payout ratio could be 29%, which we are pretty comfortable with and we think would be feasible on an earnings basis.

Cathay General Bancorp Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. The annual payment during the last 10 years was $0.04 in 2013, and the most recent fiscal year payment was $1.36. This implies that the company grew its distributions at a yearly rate of about 42% over that duration. We can see that payments have shown some very nice upward momentum without faltering, which provides some reassurance that future payments will also be reliable.

The Dividend Looks Likely To Grow

Investors could be attracted to the stock based on the quality of its payment history. Cathay General Bancorp has seen EPS rising for the last five years, at 17% per annum. With a decent amount of growth and a low payout ratio, we think this bodes well for Cathay General Bancorp's prospects of growing its dividend payments in the future.

We Really Like Cathay General Bancorp's Dividend

In summary, it is good to see that the dividend is staying consistent, and we don't think there is any reason to suspect this might change over the medium term. The distributions are easily covered by earnings, and there is plenty of cash being generated as well. However, it is worth noting that the earnings are expected to fall over the next year, which may not change the long term outlook, but could affect the dividend payment in the next 12 months. 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. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Taking the debate a bit further, we've identified 1 warning sign for Cathay General Bancorp that investors need to be conscious of moving forward. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.