East West Bancorp's (NASDAQ:EWBC) Upcoming Dividend Will Be Larger Than Last Year's

The board of East West Bancorp, Inc. (NASDAQ:EWBC) has announced that it will be paying its dividend of $0.55 on the 15th of February, an increased payment from last year's comparable dividend. This takes the annual payment to 3.0% of the current stock price, which is about average for the industry.

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 East West Bancorp's stock price has increased by 41% 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 East West Bancorp

East West Bancorp's Payment Expected To Have Solid Earnings Coverage

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

East West Bancorp has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. While past records don't necessarily translate into future results, the company's payout ratio of 23% also shows that East West Bancorp is able to comfortably pay dividends.

Looking forward, EPS is forecast to rise by 14.0% over the next 3 years. Analysts forecast the future payout ratio could be 25% over the same time horizon, which is a number we think the company can maintain.

East West Bancorp Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2014, the dividend has gone from $0.60 total annually to $2.20. This means that it has been growing its distributions at 14% per annum over that time. We can see that payments have shown some very nice upward momentum without faltering, which provides some reassurance that future payments will also be reliable.

The Dividend Looks Likely To Grow

The company's investors will be pleased to have been receiving dividend income for some time. East West Bancorp has impressed us by growing EPS at 11% per year over the past five years. East West Bancorp definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

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. Earnings are easily covering distributions, and the company is generating plenty of cash. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. As an example, we've identified 1 warning sign for East West Bancorp that you should be aware of before investing. 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.