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

Westamerica Bancorporation (NASDAQ:WABC) will pay a dividend of $0.44 on the 15th of November. This means that the annual payment will be 3.4% of the current stock price, which is in line with the average for the industry.

Check out our latest analysis for Westamerica Bancorporation

Westamerica Bancorporation's Earnings Will Easily Cover The Distributions

While it is always good to see a solid dividend yield, we should also consider whether the payment is feasible.

Having distributed dividends for at least 10 years, Westamerica Bancorporation 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 32%, which means that Westamerica Bancorporation would be able to pay its last dividend without pressure on the balance sheet.

Looking forward, earnings per share is forecast to fall by 38.3% over the next 3 years. Despite that, analysts estimate the future payout ratio could be 44% over the same time period, which is in a pretty comfortable range.

Westamerica Bancorporation Has A Solid Track Record

The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. The dividend has gone from an annual total of $1.52 in 2014 to the most recent total annual payment of $1.76. This implies that the company grew its distributions at a yearly rate of about 1.5% over that duration. Dividends have grown relatively slowly, which is not great, but some investors may value the relative consistency of the dividend.

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. Westamerica Bancorporation has impressed us by growing EPS at 13% per year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for Westamerica Bancorporation's prospects of growing its dividend payments in the future.

Westamerica Bancorporation Looks Like A Great Dividend Stock

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 distributions are easily covered by earnings, and there is plenty of cash being generated as well. 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.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. However, there are other things to consider for investors when analysing stock performance. For example, we've picked out 1 warning sign for Westamerica Bancorporation that investors should know about before committing capital to this stock. Is Westamerica Bancorporation not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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