Chemung Financial's (NASDAQ:CHMG) Dividend Will Be $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 3rd of October. This means the dividend yield will be fairly typical at 2.9%.

Check out our latest analysis for Chemung Financial

Chemung Financial's Earnings Will Easily Cover The Distributions

We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue.

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.

Over the next year, EPS is forecast to fall by 2.4%. 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

Even over a long history of paying dividends, the company's distributions have been remarkably stable. The annual payment during the last 10 years was $1.00 in 2012, and the most recent fiscal year payment was $1.24. This implies that the company grew its distributions at a yearly rate of about 2.2% over that duration. 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 20% per 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.

We Really Like Chemung Financial's Dividend

In summary, it is good to see that the dividend is staying consistent, and we don't think there is any reason to suspect this might change over the medium term. The company is generating plenty of cash, and the earnings also quite easily cover the distributions. 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. All of these factors considered, we think this has solid potential as a dividend stock.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. However, there are other things to consider for investors when analysing stock performance. Case in point: We've spotted 2 warning signs for Chemung Financial (of which 1 is a bit concerning!) you should know about. 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.