Westamerica Bancorporation (NASDAQ:WABC) Is Paying Out A Dividend Of $0.44

The board of Westamerica Bancorporation (NASDAQ:WABC) has announced that it will pay a dividend of $0.44 per share on the 16th of August. This means the dividend yield will be fairly typical at 3.2%.

View our latest analysis for Westamerica Bancorporation

Westamerica Bancorporation's Dividend Forecasted To Be Well Covered By Earnings

We like a dividend to be consistent over the long term, so checking whether it is sustainable is important.

Having distributed dividends for at least 10 years, Westamerica Bancorporation has a long history of paying out a part of its earnings to shareholders. Based on Westamerica Bancorporation's last earnings report, the payout ratio is at a decent 31%, meaning that the company is able to pay out its dividend with a bit of room to spare.

Looking forward, earnings per share is forecast to fall by 15.8% over the next year. But if the dividend continues along the path it has been on recently, we estimate the future payout ratio could be 37%, which would be comfortable for the company to continue in the future.

Westamerica Bancorporation Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. The annual payment during the last 10 years was $1.52 in 2014, and the most recent fiscal year payment was $1.76. This implies that the company grew its distributions at a yearly rate of about 1.5% over that duration. Slow and steady dividend growth might not sound that exciting, but dividends have been stable for ten years, which we think makes this a fairly attractive offer.

The Dividend Looks Likely To Grow

The company's investors will be pleased to have been receiving dividend income for some time. It's encouraging to see that Westamerica Bancorporation has been growing its earnings per share at 15% a year over the past five years. A low payout ratio and decent growth suggests that the company is reinvesting well, and it also has plenty of room to increase the dividend over time.

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 company is generating plenty of cash, and the earnings also quite easily cover the distributions. However, it is worth noting that the earnings are expected to fall over the next year, which may not change the long term outlook, but could affect the dividend payment in the next 12 months. All in all, this checks a lot of the boxes we look for when choosing an income stock.

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. Taking the debate a bit further, we've identified 1 warning sign for Westamerica Bancorporation that investors need to be conscious of moving forward. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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