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

The board of Chemung Financial Corporation (NASDAQ:CHMG) has announced that it will pay a dividend of $0.31 per share on the 2nd of October. This means that the annual payment will be 3.1% of the current stock price, which is in line with the average for the industry.

See our latest analysis for Chemung Financial

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

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

Chemung Financial has a long history of paying out dividends, with its current track record at a minimum of 10 years. While past data isn't a guarantee for the future, Chemung Financial's latest earnings report puts its payout ratio at 21%, showing that the company can pay out its dividends comfortably.

EPS is set to fall by 9.2% over the next 12 months. But if the dividend continues along recent trends, we estimate the future payout ratio could be 24%, which we would consider to be quite comfortable looking forward, with most of the company's earnings left over to grow the business in the future.

Chemung Financial 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 $1.00 in 2013, and the most recent fiscal year payment was $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. Chemung Financial has impressed us by growing EPS at 27% per year over the past five years. Earnings have been growing rapidly, and with a low payout ratio we think that the company could turn out to be a great dividend stock.

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. 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.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For example, we've picked out 1 warning sign for Chemung Financial that investors should know about before committing capital to this stock. If you are a dividend investor, you might also want to look at our curated list of high yield 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.