East West Bancorp (NASDAQ:EWBC) Is Increasing Its Dividend To $0.48

East West Bancorp, Inc.'s (NASDAQ:EWBC) dividend will be increasing from last year's payment of the same period to $0.48 on 21st of February. The payment will take the dividend yield to 2.5%, which is in line with the average for the industry.

View our latest analysis for East West Bancorp

East West Bancorp's Earnings Will Easily Cover The Distributions

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

East West Bancorp has a long history of paying out dividends, with its current track record at a minimum of 10 years. While past records don't necessarily translate into future results, the company's payout ratio of 20% also shows that East West Bancorp is able to comfortably pay dividends.

Looking forward, EPS is forecast to rise by 24.0% over the next 3 years. The future payout ratio could be 21% over that time period, according to analyst estimates, which is a good look for the future of the dividend.

East West Bancorp Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. Since 2013, the dividend has gone from $0.40 total annually to $1.92. This works out to be a compound annual growth rate (CAGR) of approximately 17% a year over that time. It is good to see that there has been strong dividend growth, and that there haven't been any cuts for a long time.

The Dividend Looks Likely To Grow

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. East West Bancorp has seen EPS rising for the last five years, at 18% per annum. Growth in EPS bodes well for the dividend, as does the low payout ratio that the company is currently reporting.

East West Bancorp Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that East West Bancorp is a strong income stock thanks to its track record and growing earnings. Distributions are quite easily covered by earnings, which are also being converted to cash flows. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For example, we've picked out 1 warning sign for East West Bancorp that investors should know about before committing capital to this stock. Is East West Bancorp not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.