Westamerica Bancorporation (NASDAQ:WABC) has announced that it will pay a dividend of US$0.41 per share on the 13th of August. The dividend yield will be 2.9% based on this payment which is still above the industry average.
Westamerica Bancorporation's Payment Has Solid Earnings Coverage
A big dividend yield for a few years doesn't mean much if it can't be sustained. Based on the last payment, Westamerica Bancorporation was quite comfortably earning enough to cover the dividend. This indicates that quite a large proportion of earnings is being invested back into the business.
EPS is set to fall by 4.2% over the next 12 months. Assuming the dividend continues along recent trends, we believe the payout ratio could be 54%, which we are pretty comfortable with and we think is feasible on an earnings basis.
Westamerica Bancorporation Has A Solid Track Record
Even over a long history of paying dividends, the company's distributions have been remarkably stable. The first annual payment during the last 10 years was US$1.44 in 2011, and the most recent fiscal year payment was US$1.64. This implies that the company grew its distributions at a yearly rate of about 1.3% over that duration. Dividends have grown relatively slowly, which is not great, but some investors may value the relative consistency of the dividend.
Westamerica Bancorporation Could Grow Its Dividend
Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Westamerica Bancorporation has impressed us by growing EPS at 7.2% per year over the past five years. The company is paying a reasonable amount of earnings to shareholders, and is growing earnings at a decent rate so we think it could be a decent dividend stock.
Westamerica Bancorporation Looks Like A Great Dividend Stock
Overall, we like to see the dividend staying consistent, and we think Westamerica Bancorporation might even raise payments in the future. The earnings easily cover the company's distributions, and the company is generating plenty of cash. We should point out that the earnings are expected to fall over the next 12 months, which won't be a problem if this doesn't become a trend, but could cause some turbulence in the next year. All of these factors considered, we think this has solid potential as a dividend stock.
It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. However, there are other things to consider for investors when analysing stock performance. As an example, we've identified 1 warning sign for Westamerica Bancorporation that you should be aware of before investing. We have also put together a list of global stocks with a solid dividend.
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What are the risks and opportunities for Westamerica Bancorporation?
Price-To-Earnings ratio (12.5x) is below the US market (15.5x)
Earnings are forecast to grow 9.06% per year
Earnings grew by 41.1% over the past year
No risks detected for WABC from our risks checks.
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Westamerica Bancorporation operates as a bank holding company for the Westamerica Bank that provides various banking products and services to individual and commercial customers.
Outstanding track record with flawless balance sheet and pays a dividend.