Codorus Valley Bancorp (NASDAQ:CVLY) Is Increasing Its Dividend To $0.17

Codorus Valley Bancorp, Inc.'s (NASDAQ:CVLY) dividend will be increasing from last year's payment of the same period to $0.17 on 8th of August. This takes the annual payment to 3.2% of the current stock price, which is about average for the industry.

Check out our latest analysis for Codorus Valley Bancorp

Codorus Valley Bancorp's Payment Expected To Have Solid Earnings Coverage

Solid dividend yields are great, but they only really help us if the payment is sustainable.

Codorus Valley Bancorp has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. Using data from its latest earnings report, Codorus Valley Bancorp's payout ratio sits at 24%, an extremely comfortable number that shows that it can pay its dividend.

EPS is set to fall by 9.0% over the next 12 months. But assuming the dividend continues along recent trends, we believe the future payout ratio could be 30%, which we are pretty comfortable with and we think would be feasible on an earnings basis.

Dividend Volatility

The company's dividend history has been marked by instability, with at least one cut in the last 10 years. Since 2013, the annual payment back then was $0.298, compared to the most recent full-year payment of $0.64. This means that it has been growing its distributions at 8.0% per annum over that time. We like to see dividends have grown at a reasonable rate, but with at least one substantial cut in the payments, we're not certain this dividend stock would be ideal for someone intending to live on the income.

The Dividend Looks Likely To Grow

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. It's encouraging to see that Codorus Valley Bancorp has been growing its earnings per share at 14% a year over the past five years. Codorus Valley Bancorp definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

Codorus Valley Bancorp Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that Codorus Valley Bancorp is a strong income stock thanks to its track record and growing earnings. The earnings easily cover the company's distributions, and the company is generating plenty of cash. 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.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Case in point: We've spotted 2 warning signs for Codorus Valley Bancorp (of which 1 shouldn't be ignored!) you should know about. 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.