TowneBank (NASDAQ:TOWN) Is Increasing Its Dividend To $0.27

TowneBank (NASDAQ:TOWN) has announced that it will be increasing its periodic dividend on the 11th of July to $0.27, which will be 8.0% higher than last year's comparable payment amount of $0.25. Based on this payment, the dividend yield for the company will be 2.9%, which is fairly typical for the industry.

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TowneBank's Dividend Forecasted To Be Well Covered By Earnings

We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue.

TowneBank 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 TowneBank's payout ratio of 42% is a good sign as this means that earnings decently cover dividends.

Over the next year, EPS is forecast to expand by 22.9%. Assuming the dividend continues along recent trends, we think the future payout ratio could be 37% by next year, which is in a pretty sustainable range.

View our latest analysis for TowneBank

TowneBank Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. Since 2015, the dividend has gone from $0.44 total annually to $1.00. This means that it has been growing its distributions at 8.6% per annum over that time. The growth of the dividend has been pretty reliable, so we think this can offer investors some nice additional income in their portfolio.

We Could See TowneBank's Dividend Growing

Investors could be attracted to the stock based on the quality of its payment history. It's encouraging to see that TowneBank has been growing its earnings per share at 5.5% a year over the past five years. Shareholders are getting plenty of the earnings returned to them, which combined with strong growth makes this quite appealing.

We Really Like TowneBank's Dividend

Overall, a dividend increase is always good, and we think that TowneBank is a strong income stock thanks to its track record and growing earnings. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All of these factors considered, we think this has solid potential as a dividend stock.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. However, there are other things to consider for investors when analysing stock performance. Companies that are growing earnings tend to be the best dividend stocks over the long term. See what the 4 analysts we track are forecasting for TowneBank for free with public analyst estimates for the company. Is TowneBank 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.