Union Bankshares' (NASDAQ:UNB) Dividend Will Be $0.36

The board of Union Bankshares, Inc. (NASDAQ:UNB) has announced that it will pay a dividend of $0.36 per share on the 1st of August. The dividend yield will be 5.8% based on this payment which is still above the industry average.

View our latest analysis for Union Bankshares

Union Bankshares' Payment Expected To Have Solid Earnings Coverage

A big dividend yield for a few years doesn't mean much if it can't be sustained.

Union Bankshares 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 Union Bankshares' payout ratio of 61% is a good sign as this means that earnings decently cover dividends.

Looking forward, earnings per share could rise by 8.8% over the next year if the trend from the last few years continues. If the dividend continues on this path, the future payout ratio could be 58% by next year, which we think can be pretty sustainable going forward.

Union Bankshares Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. Since 2014, the dividend has gone from $1.04 total annually to $1.44. This works out to be a compound annual growth rate (CAGR) of approximately 3.3% a year over that time. Slow and steady dividend growth might not sound that exciting, but dividends have been stable for ten years, which we think makes this a fairly attractive offer.

The Dividend Has Growth Potential

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Union Bankshares has seen EPS rising for the last five years, at 8.8% per annum. Shareholders are getting plenty of the earnings returned to them, which combined with strong growth makes this quite appealing.

We Really Like Union Bankshares' Dividend

Overall, we like to see the dividend staying consistent, and we think Union Bankshares might even raise payments in the future. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. All of these factors considered, we think this has solid potential as a dividend stock.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. However, there are other things to consider for investors when analysing stock performance. Are management backing themselves to deliver performance? Check their shareholdings in Union Bankshares in our latest insider ownership analysis. Is Union Bankshares not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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