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

Cathay General Bancorp's (NASDAQ:CATY) investors are due to receive a payment of $0.34 per share on 9th of June. This means the dividend yield will be fairly typical at 3.1%.

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Cathay General Bancorp's Earnings Will Easily Cover The Distributions

Unless the payments are sustainable, the dividend yield doesn't mean too much.

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. Past distributions do not necessarily guarantee future ones, but Cathay General Bancorp's payout ratio of 26% is a good sign as this means that earnings decently cover dividends.

The next year is set to see EPS grow by 12.3%. Assuming the dividend continues along recent trends, we think the future payout ratio could be 33% by next year, which is in a pretty sustainable range.

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Cathay General Bancorp 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 annual payment during the last 10 years was $0.28 in 2015, and the most recent fiscal year payment was $1.36. This works out to be a compound annual growth rate (CAGR) of approximately 17% a year over that time. 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.

Dividend Growth May Be Hard To Achieve

The company's investors will be pleased to have been receiving dividend income for some time. Earnings per share has been crawling upwards at 4.5% per year. While growth may be thin on the ground, Cathay General Bancorp could always pay out a higher proportion of earnings to increase shareholder returns.

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. Earnings are easily covering distributions, and the company is generating plenty of cash. Taking this all into consideration, this looks like it could be a good dividend opportunity.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Companies that are growing earnings tend to be the best dividend stocks over the long term. See what the 4 analysts we track are forecasting for Cathay General Bancorp for free with public analyst estimates for the company. Is Cathay General Bancorp not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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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.