Unity Bancorp (NASDAQ:UNTY) Is Paying Out A Dividend Of $0.12

The board of Unity Bancorp, Inc. (NASDAQ:UNTY) has announced that it will pay a dividend on the 29th of December, with investors receiving $0.12 per share. This payment means the dividend yield will be 1.8%, which is below the average for the industry.

Check out our latest analysis for Unity Bancorp

Unity Bancorp's Payment Expected To Have Solid Earnings Coverage

It would be nice for the yield to be higher, but we should also check if higher levels of dividend payment would be sustainable.

Unity Bancorp has a long history of paying out dividends, with its current track record at a minimum of 10 years. While past data isn't a guarantee for the future, Unity Bancorp's latest earnings report puts its payout ratio at 12%, showing that the company can pay out its dividends comfortably.

Over the next 3 years, EPS is forecast to expand by 9.8%. Analysts estimate the future payout ratio will be 12% over the same time period, which is in the range that makes us comfortable with the sustainability of the dividend.

Unity Bancorp Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. Since 2013, the dividend has gone from $0.0364 total annually to $0.48. This works out to be a compound annual growth rate (CAGR) of approximately 29% a year over that time. We can see that payments have shown some very nice upward momentum without faltering, which provides some reassurance that future payments will also be reliable.

The Dividend Looks Likely To Grow

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. It's encouraging to see that Unity Bancorp has been growing its earnings per share at 18% a year over the past five years. Unity Bancorp definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

Unity Bancorp Looks Like A Great Dividend Stock

Overall, we like to see the dividend staying consistent, and we think Unity Bancorp 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 in all, this checks a lot of the boxes we look for when choosing an income stock.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Companies that are growing earnings tend to be the best dividend stocks over the long term. See what the 3 analysts we track are forecasting for Unity Bancorp for free with public analyst estimates for the company. Is Unity Bancorp 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.