Chemung Financial (NASDAQ:CHMG) Will 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 payment means that the dividend yield will be 3.3%, which is around the industry average.

View our latest analysis for Chemung Financial

Chemung Financial's Earnings Will Easily Cover The Distributions

While it is always good to see a solid dividend yield, we should also consider whether the payment is feasible.

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.

EPS is set to fall by 8.0% over the next 12 months. But if the dividend continues along the path it has been on recently, we estimate the future payout ratio could be 22%, which would be comfortable for the company to continue in the future.

Chemung Financial Has A Solid Track Record

The company has an extended history of paying stable dividends. 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. While the consistency in the dividend payments is impressive, we think the relatively slow rate of growth is less attractive.

The Dividend Looks Likely To Grow

The company's investors will be pleased to have been receiving dividend income for some time. 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.

We Really Like Chemung Financial's Dividend

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. 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. 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. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Taking the debate a bit further, we've identified 1 warning sign for Chemung Financial that investors need to be conscious of moving forward. 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.