Union Bankshares (NASDAQ:UNB) Is Due To Pay A Dividend Of $0.36

Union Bankshares, Inc. (NASDAQ:UNB) will pay a dividend of $0.36 on the 2nd of May. Based on this payment, the dividend yield on the company's stock will be 5.2%, which is an attractive boost to shareholder returns.

Check out our latest analysis for Union Bankshares

Union Bankshares' Payment Expected To Have Solid Earnings Coverage

If the payments aren't sustainable, a high yield for a few years won't matter that much.

Union Bankshares has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. Past distributions do not necessarily guarantee future ones, but Union Bankshares' payout ratio of 58% is a good sign as this means that earnings decently cover dividends.

If the trend of the last few years continues, EPS will grow by 9.5% over the next 12 months. Assuming the dividend continues along recent trends, we think the future payout ratio could be 55% by next year, which is in a pretty sustainable range.

Union Bankshares Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2014, the dividend has gone from $1.00 total annually to $1.44. This means that it has been growing its distributions at 3.7% per annum 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.

We Could See Union Bankshares' Dividend Growing

Investors could be attracted to the stock based on the quality of its payment history. We are encouraged to see that Union Bankshares has grown earnings per share at 9.5% per year over the past five years. Earnings are on the uptrend, and it is only paying a small portion of those earnings to shareholders.

Union Bankshares Looks Like A Great Dividend Stock

Overall, we like to see the dividend staying consistent, and we think Union Bankshares might even raise payments in the future. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All in all, this checks a lot of the boxes we look for when choosing an income stock.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Are management backing themselves to deliver performance? Check their shareholdings in Union Bankshares in our latest insider ownership analysis. 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.