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

Union Bankshares, Inc. (NASDAQ:UNB) will pay a dividend of $0.36 on the 7th of August. This makes the dividend yield 5.4%, which will augment investor returns quite nicely.

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Union Bankshares' Payment Expected To Have Solid Earnings Coverage

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable.

Union Bankshares has a long history of paying out dividends, with its current track record at a minimum of 10 years. Taking data from its last earnings report, calculating for the company's payout ratio shows 74%, which means that Union Bankshares would be able to pay its last dividend without pressure on the balance sheet.

Looking forward, could fall by 3.2% if the company can't turn things around from the last few years. If recent patterns in the dividend continue, we could see the future payout ratio reaching 79% in the next 12 months which is on the higher end of the range we would say is sustainable.

View our latest analysis for Union Bankshares

Union Bankshares 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 an annual total of $1.04 in 2015 to the most recent total annual payment of $1.44. This implies that the company grew its distributions at a yearly rate of about 3.3% over that duration. 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.

Union Bankshares May Find It Hard To Grow The Dividend

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. However, things aren't all that rosy. Union Bankshares has seen earnings per share falling at 3.2% per year over the last five years. A modest decline in earnings isn't great, and it makes it quite unlikely that the dividend will grow in the future unless that trend can be reversed.

In Summary

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Union Bankshares' payments, as there could be some issues with sustaining them into the future. While Union Bankshares is earning enough to cover the dividend, we are generally unimpressed with its future prospects. This company is not in the top tier of income providing stocks.

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. Taking the debate a bit further, we've identified 1 warning sign for Union Bankshares that investors need to be conscious of moving forward. If you are a dividend investor, you might also want to look at our curated list of high yield 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.