Lakeland Bancorp's (NASDAQ:LBAI) Dividend Will Be $0.145

Lakeland Bancorp, Inc. (NASDAQ:LBAI) will pay a dividend of $0.145 on the 16th of November. This makes the dividend yield 5.1%, which will augment investor returns quite nicely.

See our latest analysis for Lakeland Bancorp

Lakeland Bancorp's Dividend Forecasted To Be Well Covered By Earnings

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable.

Lakeland Bancorp has a long history of paying out dividends, with its current track record at a minimum of 10 years. Past distributions do not necessarily guarantee future ones, but Lakeland Bancorp's payout ratio of 39% is a good sign as this means that earnings decently cover dividends.

EPS is set to fall by 19.5% over the next 3 years. Despite that, analysts estimate the future payout ratio could be 54% over the same time period, which is in a pretty comfortable range.

Lakeland Bancorp Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. The annual payment during the last 10 years was $0.267 in 2013, and the most recent fiscal year payment was $0.58. This means that it has been growing its distributions at 8.1% per annum over that time. Dividends have grown at a reasonable rate over this period, and without any major cuts in the payment over time, we think this is an attractive combination as it provides a nice boost to shareholder returns.

Lakeland Bancorp May Find It Hard To Grow The Dividend

The company's investors will be pleased to have been receiving dividend income for some time. However, Lakeland Bancorp has only grown its earnings per share at 3.2% per annum over the past five years. While EPS growth is quite low, Lakeland Bancorp has the option to increase the payout ratio to return more cash to shareholders.

We Really Like Lakeland Bancorp's Dividend

Overall, we think that this is a great income investment, and we think that maintaining the dividend this year may have been a conservative choice. The distributions are easily covered by earnings, and there is plenty of cash being generated as well. However, it is worth noting that the earnings are expected to fall over the next year, which may not change the long term outlook, but could affect the dividend payment in the next 12 months. All in all, this checks a lot of the boxes we look for when choosing an income stock.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. As an example, we've identified 1 warning sign for Lakeland Bancorp that you should be aware of before investing. Is Lakeland 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.