Eastern Bankshares (NASDAQ:EBC) Has Announced A Dividend Of $0.10

Eastern Bankshares, Inc.'s (NASDAQ:EBC) investors are due to receive a payment of $0.10 per share on 15th of June. This means the dividend yield will be fairly typical at 3.5%.

View our latest analysis for Eastern Bankshares

Eastern Bankshares' Distributions May Be Difficult To Sustain

We like a dividend to be consistent over the long term, so checking whether it is sustainable is important.

Eastern Bankshares has a short history of paying out dividends, with its current track record at only 2 years. While Eastern Bankshares' efforts to pay out a dividend can be applauded, its latest earnings report actually shows that the company didn't have enough earnings in the year to cover its dividends. This is worrying for investors as it points to Eastern Bankshares' dividends being unsustainable in the long term.

Looking forward, earnings per share is forecast to rise by 65.2% over the next year. The company seems to be going down the right path, but it will take a little bit longer than a year to cross over into profitability. Unless this can be done in short order, the dividend might be difficult to sustain.

Eastern Bankshares Doesn't Have A Long Payment History

Looking back, the dividend has been stable, but the company hasn't been paying a dividend for very long so we can't be confident that the dividend will remain stable through all economic environments. Since 2021, the annual payment back then was $0.24, compared to the most recent full-year payment of $0.40. This means that it has been growing its distributions at 29% per annum over that time. The dividend has been growing rapidly, however with such a short payment history we can't know for sure if payment can continue to grow over the long term, so caution may be warranted.

The Company Could Face Some Challenges Growing The Dividend

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. We are encouraged to see that Eastern Bankshares has grown earnings per share at 24% per year over the past three years. The company hasn't been turning a profit, but it running in the right direction. If this trajectory continues and the company can turn a profit soon, it could bode well for the dividend going forward.

The Dividend Could Prove To Be Unreliable

Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. In general, the distributions are a little bit higher than we would like, but we can't ignore the fact the quickly growing earnings gives this stock great potential in the future. Overall, we don't think this company has the makings of a good income 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. Taking the debate a bit further, we've identified 1 warning sign for Eastern Bankshares that investors need to be conscious of moving forward. Is Eastern Bankshares not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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