Columbia Banking System (NASDAQ:COLB) Will Pay A Dividend Of $0.36

Columbia Banking System, Inc. (NASDAQ:COLB) will pay a dividend of $0.36 on the 17th of March. The dividend yield will be 5.3% based on this payment which is still above the industry average.

View our latest analysis for Columbia Banking System

Columbia Banking System's Earnings Will Easily Cover The Distributions

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable.

Having distributed dividends for at least 10 years, Columbia Banking System has a long history of paying out a part of its earnings to shareholders. Based on Columbia Banking System's last earnings report, the payout ratio is at a decent 62%, meaning that the company is able to pay out its dividend with a bit of room to spare.

Over the next 3 years, EPS is forecast to expand by 9.0%. The future payout ratio could be 49% over that time period, according to analyst estimates, which is a good look for the future of the dividend.

Columbia Banking System Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2015, the annual payment back then was $1.01, compared to the most recent full-year payment of $1.44. This works out to be a compound annual growth rate (CAGR) of approximately 3.6% a year over that time. Slow and steady dividend growth might not sound that exciting, but dividends have been stable for ten years, which we think makes this a fairly attractive offer.

Dividend Growth May Be Hard To Achieve

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Unfortunately things aren't as good as they seem. Unfortunately, Columbia Banking System's earnings per share has been essentially flat over the past five years, which means the dividend may not be increased each year.

In Summary

Overall, we think Columbia Banking System is a solid choice as a dividend stock, even though the dividend wasn't raised this year. While the payments look sustainable for now, earnings have been shrinking so the dividend could come under pressure in the future. This looks like it could be a good dividend stock going forward, but we would note that the payout ratio has been at higher levels in the past so it could happen again.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Given that earnings are not growing, the dividend does not look nearly so attractive. Very few businesses see earnings consistently shrink year after year in perpetuity though, and so it might be worth seeing what the 10 analysts we track are forecasting for the future. 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.