Westamerica Bancorporation's (NASDAQ:WABC) Dividend Will Be $0.44

Westamerica Bancorporation (NASDAQ:WABC) has announced that it will pay a dividend of $0.44 per share on the 14th of February. Based on this payment, the dividend yield will be 3.4%, which is fairly typical for the industry.

See our latest analysis for Westamerica Bancorporation

Westamerica Bancorporation's Payment Expected To Have Solid Earnings Coverage

Unless the payments are sustainable, the dividend yield doesn't mean too much.

Westamerica Bancorporation has a long history of paying out dividends, with its current track record at a minimum of 10 years. Past distributions do not necessarily guarantee future ones, but Westamerica Bancorporation's payout ratio of 34% is a good sign as this means that earnings decently cover dividends.

Looking forward, earnings per share is forecast to fall by 34.3% over the next 3 years. Fortunately, analysts forecast the future payout ratio to be 44% over the same time horizon, which is in the range that makes us comfortable with the sustainability of the dividend.

Westamerica Bancorporation Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2015, the dividend has gone from $1.52 total annually to $1.76. This works out to be a compound annual growth rate (CAGR) of approximately 1.5% a year over that time. 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

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 Westamerica Bancorporation has been growing its earnings per share at 12% a year over the past five years. Westamerica Bancorporation definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

We Really Like Westamerica Bancorporation's Dividend

Overall, we think that this is a great income investment, and we think that maintaining the dividend this year may have been a conservative choice. 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 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. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For instance, we've picked out 1 warning sign for Westamerica Bancorporation that investors should take into consideration. If you are a dividend investor, you might also want to look at our curated list of high yield 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.