Orange County Bancorp (NASDAQ:OBT) Has Announced A Dividend Of $0.23

The board of Orange County Bancorp, Inc. (NASDAQ:OBT) has announced that it will pay a dividend on the 16th of September, with investors receiving $0.23 per share. This means the annual payment will be 1.7% of the current stock price, which is lower than the industry average.

See our latest analysis for Orange County Bancorp

Orange County Bancorp's Dividend Forecasted To Be Well Covered By Earnings

It would be nice for the yield to be higher, but we should also check if higher levels of dividend payment would be sustainable.

Orange County Bancorp has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. Using data from its latest earnings report, Orange County Bancorp's payout ratio sits at 15%, an extremely comfortable number that shows that it can pay its dividend.

Looking forward, earnings per share is forecast to fall by 3.8% over the next year. But if the dividend continues along recent trends, we estimate the future payout ratio could be 16%, which we would consider to be quite comfortable looking forward, with most of the company's earnings left over to grow the business in the future.

Orange County Bancorp Has A Solid Track Record

The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. Since 2014, the dividend has gone from $0.59 total annually to $0.92. This works out to be a compound annual growth rate (CAGR) of approximately 4.5% a year over that time. While the consistency in the dividend payments is impressive, we think the relatively slow rate of growth is less attractive.

The Dividend Looks Likely To Grow

The company's investors will be pleased to have been receiving dividend income for some time. Orange County Bancorp has impressed us by growing EPS at 22% per year over the past five years. A low payout ratio gives the company a lot of flexibility, and growing earnings also make it very easy for it to grow the dividend.

We Really Like Orange County 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. 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. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For instance, we've picked out 1 warning sign for Orange County Bancorp that investors should take into consideration. Is Orange County Bancorp not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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