Stock Analysis

CNB Financial's (NASDAQ:CCNE) Dividend Will Be $0.175

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NasdaqGS:CCNE
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The board of CNB Financial Corporation (NASDAQ:CCNE) has announced that it will pay a dividend of $0.175 per share on the 15th of December. This means that the annual payment will be 2.7% of the current stock price, which is in line with the average for the industry.

Check out the opportunities and risks within the US Banks industry.

CNB Financial's Payment Expected To Have Solid Earnings Coverage

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

CNB Financial 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, CNB Financial's payout ratio sits at 21%, an extremely comfortable number that shows that it can pay its dividend.

Over the next 3 years, EPS is forecast to expand by 4.7%. The future payout ratio could be 20% over that time period, according to analyst estimates, which is a good look for the future of the dividend.

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NasdaqGS:CCNE Historic Dividend November 17th 2022

CNB Financial Has A Solid Track Record

The company has an extended history of paying stable dividends. The dividend has gone from an annual total of $0.66 in 2012 to the most recent total annual payment of $0.70. Dividend payments have grown at less than 1% a year over this period. Dividends have grown relatively slowly, which is not great, but some investors may value the relative consistency of the dividend.

We Could See CNB Financial's Dividend Growing

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. We are encouraged to see that CNB Financial has grown earnings per share at 10.0% per year over the past five years. A low payout ratio and decent growth suggests that the company is reinvesting well, and it also has plenty of room to increase the dividend over time.

An additional note is that the company has been raising capital by issuing stock equal to 25% of shares outstanding in the last 12 months. Trying to grow the dividend when issuing new shares reminds us of the ancient Greek tale of Sisyphus - perpetually pushing a boulder uphill. Companies that consistently issue new shares are often suboptimal from a dividend perspective.

We Really Like CNB Financial'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 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 of these factors considered, we think this has solid potential as a dividend 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 CNB Financial that you should be aware of before investing. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

What are the risks and opportunities for CNB Financial?

CNB Financial Corporation operates as the bank holding company for CNB Bank that provides a range of banking products and services for individual, business, governmental, and institutional customers.

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Rewards

  • Trading at 35.8% below our estimate of its fair value

  • Earnings are forecast to grow 11.22% per year

  • Earnings grew by 10.6% over the past year

Risks

  • Shareholders have been diluted in the past year

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