ChoiceOne Financial Services' (NASDAQ:COFS) Upcoming Dividend Will Be Larger Than Last Year's

The board of ChoiceOne Financial Services, Inc. (NASDAQ:COFS) has announced that it will be paying its dividend of $0.26 on the 29th of September, an increased payment from last year's comparable dividend. This makes the dividend yield 4.5%, which is above the industry average.

Check out our latest analysis for ChoiceOne Financial Services

ChoiceOne Financial Services' Earnings Will Easily Cover The Distributions

If the payments aren't sustainable, a high yield for a few years won't matter that much.

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 33%, which means that ChoiceOne Financial Services would be able to pay its last dividend without pressure on the balance sheet.

Over the next year, EPS could expand by 11.2% if recent trends continue. If the dividend continues on this path, the future payout ratio could be 33% by next year, which we think can be pretty sustainable going forward.

ChoiceOne Financial Services Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. Since 2013, the annual payment back then was $0.472, compared to the most recent full-year payment of $1.04. This means that it has been growing its distributions at 8.2% per annum over that time. Companies like this can be very valuable over the long term, if the decent rate of growth can be maintained.

The Dividend Looks Likely To Grow

Investors could be attracted to the stock based on the quality of its payment history. We are encouraged to see that ChoiceOne Financial Services has grown earnings per share at 11% per year over the past five years. Growth in EPS bodes well for the dividend, as does the low payout ratio that the company is currently reporting.

ChoiceOne Financial Services Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that ChoiceOne Financial Services is a strong income stock thanks to its track record and growing earnings. 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. All in all, this checks a lot of the boxes we look for when choosing an income 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. Are management backing themselves to deliver performance? Check their shareholdings in ChoiceOne Financial Services in our latest insider ownership analysis. 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.