ChoiceOne Financial Services (NASDAQ:COFS) Has Announced That It Will Be Increasing Its Dividend To $0.26

ChoiceOne Financial Services, Inc. (NASDAQ:COFS) will increase its dividend on the 30th of December to $0.26, which is 4.0% higher than last year's payment from the same period of $0.25. This takes the dividend yield to 4.1%, which shareholders will be pleased with.

Check out the opportunities and risks within the US Banks industry.

ChoiceOne Financial Services' Earnings Will Easily Cover The Distributions

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained.

ChoiceOne Financial Services has a long history of paying out dividends, with its current track record at a minimum of 10 years. Taking data from its last earnings report, calculating for the company's payout ratio shows 34%, which means that ChoiceOne Financial Services would be able to pay its last dividend without pressure on the balance sheet.

If the trend of the last few years continues, EPS will grow by 10.3% over the next 12 months. Assuming the dividend continues along recent trends, we think the future payout ratio could be 34% by next year, which is in a pretty sustainable range.

ChoiceOne Financial Services 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 $0.435 in 2012, and the most recent fiscal year payment was $1.00. This works out to be a compound annual growth rate (CAGR) of approximately 8.7% a year over that time. Dividends have grown at a reasonable rate over this period, and without any major cuts in the payment over time, we think this is an attractive combination as it provides a nice boost to shareholder returns.

The Dividend Looks Likely To Grow

Investors could be attracted to the stock based on the quality of its payment history. ChoiceOne Financial Services has impressed us by growing EPS at 10% per year over the past five years. ChoiceOne Financial Services definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

ChoiceOne Financial Services Looks Like A Great Dividend Stock

Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. See if management have their own wealth at stake, by checking insider shareholdings in ChoiceOne Financial Services stock. Is ChoiceOne Financial Services 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.