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 on the 2nd of January, with investors receiving $0.31 per share. This payment means the dividend yield will be 2.7%, which is below the average for the industry.

View our latest analysis for Chemung Financial

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

Even a low dividend yield can be attractive if it is sustained for years on end.

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 records don't necessarily translate into future results, the company's payout ratio of 20% also shows that Chemung Financial is able to comfortably pay dividends.

Looking forward, earnings per share is forecast to fall by 11.6% over the next 3 years. Fortunately, analysts forecast the future payout ratio to be 23% over the same time horizon, which is in the range that makes us comfortable with the sustainability of the dividend.

Chemung Financial Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. The dividend has gone from an annual total of $1.00 in 2013 to the most recent total annual payment of $1.24. This works out to be a compound annual growth rate (CAGR) of approximately 2.2% a year over that time. Although we can't deny that the dividend has been remarkably stable in the past, the growth has been pretty muted.

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 20% per year over the past five years. A low payout ratio gives the company a lot of flexibility, and growing earnings also make it very easy for it to grow the dividend.

Chemung Financial Looks Like A Great Dividend Stock

Overall, we think that this is a great income investment, and we think that maintaining the dividend this year may have been a conservative choice. The distributions are easily covered by earnings, and there is plenty of cash being generated as well. We should point out that the earnings are expected to fall over the next 12 months, which won't be a problem if this doesn't become a trend, but could cause some turbulence in the next year. 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. 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 Chemung Financial that you should be aware of before investing. Is Chemung Financial 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.