City Holding's (NASDAQ:CHCO) Dividend Will Be $0.79

City Holding Company's (NASDAQ:CHCO) investors are due to receive a payment of $0.79 per share on 30th of April. The payment will take the dividend yield to 2.7%, which is in line with the average for the industry.

City Holding's Payment Expected To Have Solid Earnings Coverage

Solid dividend yields are great, but they only really help us if the payment is sustainable.

City Holding has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. Based on City Holding's last earnings report, the payout ratio is at a decent 38%, meaning that the company is able to pay out its dividend with a bit of room to spare.

Over the next 3 years, EPS is forecast to fall by 0.8%. However, as estimated by analysts, the future payout ratio could be 42% over the same time period, which we think the company can easily maintain.

View our latest analysis for City Holding

City Holding Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. The dividend has gone from an annual total of $1.60 in 2015 to the most recent total annual payment of $3.16. This works out to be a compound annual growth rate (CAGR) of approximately 7.0% a year over that time. Dividends have grown at a reasonable rate over this period, and without any major cuts in the payment over time, we think this is an attractive combination as it provides a nice boost to shareholder returns.

The Dividend Has Growth Potential

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 City Holding has grown earnings per share at 7.8% per year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for City Holding's prospects of growing its dividend payments in the future.

We Really Like City Holding's Dividend

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. 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. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. However, there are other things to consider for investors when analysing stock performance. As an example, we've identified 1 warning sign for City Holding 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.