United Community Banks (NASDAQ:UCBI) Is Due To Pay A Dividend Of $0.23

United Community Banks, Inc. (NASDAQ:UCBI) has announced that it will pay a dividend of $0.23 per share on the 5th of April. This means that the annual payment will be 3.6% of the current stock price, which is in line with the average for the industry.

See our latest analysis for United Community Banks

United Community Banks' Payment Expected To Have Solid Earnings Coverage

Solid dividend yields are great, but they only really help us if the payment is sustainable.

Having distributed dividends for at least 10 years, United Community Banks has a long history of paying out a part of its earnings to shareholders. Taking data from its last earnings report, calculating for the company's payout ratio shows 60%, which means that United Community Banks would be able to pay its last dividend without pressure on the balance sheet.

Looking forward, EPS is forecast to rise by 76.5% over the next 3 years. Analysts forecast the future payout ratio could be 41% over the same time horizon, which is a number we think the company can maintain.

United Community Banks Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. Since 2014, the annual payment back then was $0.12, compared to the most recent full-year payment of $0.92. This means that it has been growing its distributions at 23% per annum over that time. It is good to see that there has been strong dividend growth, and that there haven't been any cuts for a long time.

Dividend Growth Is Doubtful

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Let's not jump to conclusions as things might not be as good as they appear on the surface. It's not great to see that United Community Banks' earnings per share has fallen at approximately 6.0% per year over the past five years. If the company is making less over time, it naturally follows that it will also have to pay out less in dividends. Earnings are predicted to grow over the next year, but we would remain cautious until a track record of earnings growth is established.

Our Thoughts On United Community Banks' Dividend

Overall, a consistent dividend is a good thing, and we think that United Community Banks has the ability to continue this into the future. The earnings coverage is acceptable for now, but with earnings on the decline we would definitely keep an eye on the payout ratio. The payment isn't stellar, but it could make a decent addition to a dividend portfolio.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For instance, we've picked out 2 warning signs for United Community Banks that investors should take into consideration. Is United Community Banks 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.