Valley National Bancorp (NASDAQ:VLY) Is Paying Out A Dividend Of $0.11

Valley National Bancorp's (NASDAQ:VLY) investors are due to receive a payment of $0.11 per share on 3rd of January. Based on this payment, the dividend yield will be 3.5%, which is fairly typical for the industry.

Check out the opportunities and risks within the US Banks industry.

Valley National Bancorp's Earnings Will Easily Cover The Distributions

We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue.

Having distributed dividends for at least 10 years, Valley National Bancorp has a long history of paying out a part of its earnings to shareholders. Taking data from its last earnings report, calculating for the company's payout ratio shows 41%, which means that Valley National Bancorp would be able to pay its last dividend without pressure on the balance sheet.

The next 3 years are set to see EPS grow by 50.2%. The future payout ratio could be 29% over that time period, according to analyst estimates, which is a good look for the future of the dividend.

Dividend Volatility

The company has a long dividend track record, but it doesn't look great with cuts in the past. The dividend has gone from an annual total of $0.64 in 2012 to the most recent total annual payment of $0.44. This works out to be a decline of approximately 3.7% per year over that time. A company that decreases its dividend over time generally isn't what we are looking for.

We Could See Valley National Bancorp's Dividend Growing

Given that the dividend has been cut in the past, we need to check if earnings are growing and if that might lead to stronger dividends in the future. We are encouraged to see that Valley National Bancorp has grown earnings per share at 7.5% per 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 should note that Valley National Bancorp has issued stock equal to 24% of shares outstanding. Regularly doing this can be detrimental - it's hard to grow dividends per share when new shares are regularly being created.

Our Thoughts On Valley National Bancorp's Dividend

In summary, we are pleased with the dividend remaining consistent, and we think there is a good chance of this continuing in the future. The payout ratio looks good, but unfortunately the company's dividend track record isn't stellar. The dividend looks okay, but there have been some issues in the past, so we would be a little bit cautious.

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. As an example, we've identified 2 warning signs for Valley National Bancorp that you should be aware of before investing. Is Valley National 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.