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- NasdaqGS:UMBF
UMB Financial (NASDAQ:UMBF) Will Pay A Larger Dividend Than Last Year At $0.38
UMB Financial Corporation (NASDAQ:UMBF) will increase its dividend from last year's comparable payment on the 3rd of January to $0.38. Despite this raise, the dividend yield of 1.8% is only a modest boost to shareholder returns.
Check out the opportunities and risks within the US Banks industry.
UMB Financial's Earnings Will Easily Cover The Distributions
The dividend yield is a little bit low, but sustainability of the payments is also an important part of evaluating an income stock.
Having distributed dividends for at least 10 years, UMB Financial has a long history of paying out a part of its earnings to shareholders. While past data isn't a guarantee for the future, UMB Financial's latest earnings report puts its payout ratio at 17%, showing that the company can pay out its dividends comfortably.
Looking forward, earnings per share is forecast to fall by 7.0% over the next 3 years. Despite that, analysts estimate the future payout ratio could be 19% over the same time period, which is in a pretty comfortable range.
UMB Financial Has A Solid Track Record
The company has a sustained record of paying dividends with very little fluctuation. The dividend has gone from an annual total of $0.82 in 2012 to the most recent total annual payment of $1.52. This means that it has been growing its distributions at 6.4% per annum over that time. Dividends have grown at a reasonable rate over this period, and without any major cuts in the payment over time, we think this is an attractive combination as it provides a nice boost to shareholder returns.
The Dividend Looks Likely To Grow
The company's investors will be pleased to have been receiving dividend income for some time. We are encouraged to see that UMB Financial has grown earnings per share at 18% per year over the past five years. UMB Financial definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.
UMB Financial Looks Like A Great Dividend Stock
In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. The company is generating plenty of cash, and the earnings also quite easily cover the distributions. If earnings do fall over the next 12 months, the dividend could be buffeted a little bit, but we don't think it should cause too much of a problem in the long term. Taking this all into consideration, this looks like it could be a good dividend opportunity.
Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. However, there are other things to consider for investors when analysing stock performance. Just as an example, we've come across 2 warning signs for UMB Financial you should be aware of, and 1 of them shouldn't be ignored. Is UMB Financial 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.
About NasdaqGS:UMBF
UMB Financial
Operates as the bank holding company that provides banking services and asset servicing in the United States and internationally.
Flawless balance sheet with high growth potential and pays a dividend.