Pathfinder Bancorp's (NASDAQ:PBHC) Dividend Will Be $0.10

The board of Pathfinder Bancorp, Inc. (NASDAQ:PBHC) has announced that it will pay a dividend of $0.10 per share on the 7th of November. This payment means that the dividend yield will be 2.6%, which is around the industry average.

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Pathfinder Bancorp Will Pay Out More Than It Is Earning

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

Pathfinder Bancorp has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. Past distributions unfortunately do not guarantee future ones, and Pathfinder Bancorp's last earnings report actually showed that the company went over its net earnings in its total dividend distribution. This is an alarming sign that could mean that Pathfinder Bancorp's dividend at its current rate may no longer be sustainable for longer.

If the company can't turn things around, EPS could fall by 24.8% over the next year. If the dividend continues along the path it has been on recently, the payout ratio in 12 months could be 207%, which is definitely a bit high to be sustainable going forward.

Check out our latest analysis for Pathfinder Bancorp

Pathfinder Bancorp Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. The dividend has gone from an annual total of $0.12 in 2015 to the most recent total annual payment of $0.40. This implies that the company grew its distributions at a yearly rate of about 13% over that duration. 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 Has Limited Growth Potential

The company's investors will be pleased to have been receiving dividend income for some time. However, things aren't all that rosy. Pathfinder Bancorp's EPS has fallen by approximately 25% per year during the past five years. This steep decline can indicate that the business is going through a tough time, which could constrain its ability to pay a larger dividend each year in the future.

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. Although they have been consistent in the past, we think the payments are a little high to be sustained. We would probably look elsewhere for an income investment.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. However, there are other things to consider for investors when analysing stock performance. Just as an example, we've come across 4 warning signs for Pathfinder Bancorp you should be aware of, and 1 of them makes us a bit uncomfortable. 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.