Stock Analysis

Pathfinder Bancorp's (NASDAQ:PBHC) Shareholders Will Receive A Bigger Dividend Than Last Year

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NasdaqCM:PBHC
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Pathfinder Bancorp, Inc. (NASDAQ:PBHC) has announced that it will be increasing its dividend on the 13th of August to US$0.07. This takes the annual payment to 1.6% of the current stock price, which unfortunately is below what the industry is paying.

View our latest analysis for Pathfinder Bancorp

Pathfinder Bancorp's Earnings Easily Cover the Distributions

If it is predictable over a long period, even low dividend yields can be attractive. However, prior to this announcement, Pathfinder Bancorp's dividend was comfortably covered by both cash flow and earnings. As a result, a large proportion of what it earned was being reinvested back into the business.

Over the next year, EPS could expand by 12.1% if recent trends continue. Assuming the dividend continues along recent trends, we think the payout ratio could be 21% by next year, which is in a pretty sustainable range.

historic-dividend
NasdaqCM:PBHC Historic Dividend July 1st 2021

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 US$0.073 in 2011 to the most recent annual payment of US$0.28. This implies that the company grew its distributions at a yearly rate of about 14% over that duration. 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 could be attracted to the stock based on the quality of its payment history. Pathfinder Bancorp has seen EPS rising for the last five years, at 12% per annum. Growth in EPS bodes well for the dividend, as does the low payout ratio that the company is currently reporting.

We Really Like Pathfinder Bancorp's Dividend

Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. 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.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For example, we've picked out 1 warning sign for Pathfinder Bancorp that investors should know about before committing capital to this stock. Looking for more high-yielding dividend ideas? Try our curated list of strong dividend payers.

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About NasdaqCM:PBHC

Pathfinder Bancorp

Pathfinder Bancorp, Inc. operates as a holding company for Pathfinder Bank that provides various banking and financial products and services primarily in Oswego and Onondaga Counties, New York.

Flawless balance sheet with solid track record and pays a dividend.