Eastern Bankshares (NASDAQ:EBC) Has Affirmed Its Dividend Of $0.10

Eastern Bankshares, Inc. (NASDAQ:EBC) will pay a dividend of $0.10 on the 15th of September. This means the dividend yield will be fairly typical at 2.8%.

While the dividend yield is important for income investors, it is also important to consider any large share price moves, as this will generally outweigh any gains from distributions. Investors will be pleased to see that Eastern Bankshares' stock price has increased by 35% in the last 3 months, which is good for shareholders and can also explain a decrease in the dividend yield.

Check out our latest analysis for Eastern Bankshares

Eastern Bankshares' Dividend Forecasted To Be Well Covered By Earnings

We aren't too impressed by dividend yields unless they can be sustained over time.

Having paid out dividends for only 2 years, Eastern Bankshares does not have much of a history being a dividend paying company. But while Eastern Bankshares was able to sustain its dividend for a decent period of time, its most recent earnings report shows that the company didn't have enough earnings to cover their dividends. This is worrying for investors as it points to Eastern Bankshares' dividends being unsustainable in the long term.

According to analysts, EPS should be several times higher in the next 3 years. They also estimate that the future payout ratio will be 36% in the same time horizon, so there isn't too much pressure on the dividend.

Eastern Bankshares Is Still Building Its Track Record

The dividend has been pretty stable looking back, but the company hasn't been paying one for very long. This makes it tough to judge how it would fare through a full economic cycle. Since 2021, the dividend has gone from $0.24 total annually to $0.40. This implies that the company grew its distributions at a yearly rate of about 29% over that duration. We're not overly excited about the relatively short history of dividend payments, however the dividend is growing at a nice rate and we might take a closer look.

Dividend Growth May Be Hard To Achieve

The company's investors will be pleased to have been receiving dividend income for some time. However, things aren't all that rosy. Eastern Bankshares has seen earnings per share falling at 2.7% per year over the last three years. If the company is making less over time, it naturally follows that it will also have to pay out less in dividends. Earnings are predicted to grow over the next year, but we would remain cautious until a track record of earnings growth is established.

Eastern Bankshares' Dividend Doesn't Look Sustainable

Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. The track record isn't great, and the payments are a bit high to be considered sustainable. We would probably look elsewhere for an income investment.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. However, there are other things to consider for investors when analysing stock performance. For example, we've picked out 1 warning sign for Eastern Bankshares that investors should know about before committing capital to this stock. 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.