Chemung Financial (NASDAQ:CHMG) Is Paying Out A Dividend Of $0.31

Chemung Financial Corporation (NASDAQ:CHMG) will pay a dividend of $0.31 on the 3rd of October. Based on this payment, the dividend yield will be 2.8%, which is fairly typical for the industry.

Check out our latest analysis for Chemung Financial

Chemung Financial's Earnings Will Easily Cover The Distributions

We aren't too impressed by dividend yields unless they can be sustained over time.

Chemung Financial has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. While past records don't necessarily translate into future results, the company's payout ratio of 21% also shows that Chemung Financial is able to comfortably pay dividends.

EPS is set to fall by 2.4% 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 been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. Since 2012, 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. 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

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. It's encouraging to see that Chemung Financial has been growing its earnings per share at 20% a year over the past five years. Chemung Financial definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

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. 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. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For example, we've identified 2 warning signs for Chemung Financial (1 is significant!) 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.