Chemung Financial (NASDAQ:CHMG) Is Due To Pay A Dividend Of $0.31

Chemung Financial Corporation's (NASDAQ:CHMG) investors are due to receive a payment of $0.31 per share on 3rd of July. This means that the annual payment will be 3.6% of the current stock price, which is in line with the average for the industry.

While the dividend yield is important for income investors, it is also important to consider any large share price moves, as this will generally outweigh any gains from distributions. Chemung Financial's stock price has reduced by 31% in the last 3 months, which is not ideal for investors and can explain a sharp increase in the dividend yield.

View our latest analysis for Chemung Financial

Chemung Financial's Dividend Forecasted To Be Well Covered By Earnings

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

Having distributed dividends for at least 10 years, Chemung Financial has a long history of paying out a part of its earnings to shareholders. While past data isn't a guarantee for the future, Chemung Financial's latest earnings report puts its payout ratio at 20%, showing that the company can pay out its dividends comfortably.

EPS is set to fall by 5.6% over the next 12 months. But assuming the dividend continues along recent trends, we believe the future payout ratio could be 22%, which we are pretty comfortable with and we think would be feasible on an earnings basis.

Chemung Financial Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. Since 2013, the annual payment back then was $1.00, compared to the most recent full-year payment of $1.24. This means that it has been growing its distributions at 2.2% per annum over that time. Dividends have grown relatively slowly, which is not great, but some investors may value the relative consistency of the dividend.

The Dividend Looks Likely To Grow

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 Chemung Financial has grown earnings per share at 27% per year over the past five years. Earnings per share is growing at a solid clip, and the payout ratio is low which we think is an ideal combination in a dividend stock as the company can quite easily raise the dividend in the future.

Chemung Financial Looks Like A Great Dividend Stock

Overall, we like to see the dividend staying consistent, and we think Chemung Financial might even raise payments in the future. The distributions are easily covered by earnings, and there is plenty of cash being generated as well. If earnings do fall over the next 12 months, the dividend could be buffeted a little bit, but we don't think it should cause too much of a problem in the long term. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For instance, we've picked out 1 warning sign for Chemung Financial that investors should take into consideration. 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.