Union Bankshares (NASDAQ:UNB) Is Increasing Its Dividend To $0.36

Union Bankshares, Inc. (NASDAQ:UNB) has announced that it will be increasing its dividend from last year's comparable payment on the 4th of May to $0.36. This takes the dividend yield to 6.4%, which shareholders will be pleased with.

Check out our latest analysis for Union Bankshares

Union Bankshares' Payment Expected To Have Solid Earnings Coverage

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable.

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 50% is a good sign as this means that earnings decently cover dividends.

Over the next year, EPS could expand by 8.1% if recent trends continue. Assuming the dividend continues along recent trends, we think the future payout ratio could be 49% by next year, which is in a pretty sustainable range.

Union Bankshares Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. Since 2013, the annual payment back then was $1.00, compared to the most recent full-year payment of $1.44. This works out to be a compound annual growth rate (CAGR) of approximately 3.7% a year over that time. Although we can't deny that the dividend has been remarkably stable in the past, the growth has been pretty muted.

We Could See Union Bankshares' Dividend Growing

Investors could be attracted to the stock based on the quality of its payment history. It's encouraging to see that Union Bankshares has been growing its earnings per share at 8.1% a year over the past five years. Since earnings per share is growing at an acceptable rate, and the payout policy is balanced, we think the company is positioning itself well to grow earnings and dividends in the future.

We Really Like Union Bankshares' Dividend

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. Earnings are easily covering distributions, and the company is generating plenty of cash. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. However, there are other things to consider for investors when analysing stock performance. See if management have their own wealth at stake, by checking insider shareholdings in Union Bankshares stock. 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.