Codorus Valley Bancorp's (NASDAQ:CVLY) Upcoming Dividend Will Be Larger Than Last Year's

The board of Codorus Valley Bancorp, Inc. (NASDAQ:CVLY) has announced that it will be paying its dividend of $0.16 on the 9th of May, an increased payment from last year's comparable dividend. This takes the annual payment to 3.1% of the current stock price, which is about average for the industry.

View our latest analysis for Codorus Valley Bancorp

Codorus Valley Bancorp's Earnings Will Easily Cover The Distributions

While it is always good to see a solid dividend yield, we should also consider whether the payment is feasible.

Codorus Valley Bancorp has a long history of paying out dividends, with its current track record at a minimum of 10 years. Based on Codorus Valley Bancorp's last earnings report, the payout ratio is at a decent 28%, meaning that the company is able to pay out its dividend with a bit of room to spare.

If the trend of the last few years continues, EPS will grow by 11.3% over the next 12 months. If the dividend continues along recent trends, we estimate the future payout ratio will be 27%, which is in the range that makes us comfortable with the sustainability of the dividend.

Dividend Volatility

Although the company has a long dividend history, it has been cut at least once in the last 10 years. Since 2013, the annual payment back then was $0.313, compared to the most recent full-year payment of $0.64. This implies that the company grew its distributions at a yearly rate of about 7.4% over that duration. We have seen cuts in the past, so while the growth looks promising we would be a little bit cautious about its track record.

The Dividend Looks Likely To Grow

Given that the dividend has been cut in the past, we need to check if earnings are growing and if that might lead to stronger dividends in the future. Codorus Valley Bancorp has seen EPS rising for the last five years, at 11% per annum. 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

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. Earnings are easily covering distributions, and the company is generating plenty of cash. 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. For example, we've identified 2 warning signs for Codorus Valley Bancorp (1 can't be ignored!) that you should be aware of before investing. Is Codorus Valley Bancorp 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.