Valley National Bancorp (NASDAQ:VLY) Has Re-Affirmed Its Dividend Of US$0.11

Valley National Bancorp (NASDAQ:VLY) has announced that it will pay a dividend of US$0.11 per share on the 1st of July. This means the annual payment is 3.1% of the current stock price, which is above the average for the industry.

Check out our latest analysis for Valley National Bancorp

Valley National Bancorp's Payment Has Solid Earnings Coverage

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. The last dividend was quite easily covered by Valley National Bancorp's earnings. This means that a large portion of its earnings are being retained to grow the business.

The next year is set to see EPS grow by 15.4%. Assuming the dividend continues along recent trends, we think the payout ratio could be 38% by next year, which is in a pretty sustainable range.

Dividend Volatility

The company has a long dividend track record, but it doesn't look great with cuts in the past. The first annual payment during the last 10 years was US$0.65 in 2011, and the most recent fiscal year payment was US$0.44. The dividend has shrunk at around 3.9% a year during that period. Declining dividends isn't generally what we look for as they can indicate that the company is running into some challenges.

The Dividend Looks Likely To Grow

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. Valley National Bancorp has impressed us by growing EPS at 19% per year over the past five years. Shareholders are getting plenty of the earnings returned to them, which combined with strong growth makes this quite appealing.

Valley National Bancorp Looks Like A Great Dividend Stock

Overall, we like to see the dividend staying consistent, and we think Valley National Bancorp might even raise payments in the future. Earnings are easily covering distributions, and the company is generating plenty of cash. All of these factors considered, we think this has solid potential as a dividend stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Taking the debate a bit further, we've identified 1 warning sign for Valley National Bancorp that investors need to be conscious of moving forward. Looking for more high-yielding dividend ideas? Try our curated list of strong dividend payers.

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