Western New England Bancorp (NASDAQ:WNEB) Is Paying Out A Dividend Of $0.06

Western New England Bancorp, Inc. (NASDAQ:WNEB) has announced that it will pay a dividend of $0.06 per share on the 23rd of November. Including this payment, the dividend yield on the stock will be 2.8%, which is a modest boost for shareholders' returns.

Our analysis indicates that WNEB is potentially undervalued!

Western New England Bancorp's Dividend Forecasted To Be Well Covered By Earnings

While yield is important, another factor to consider about a company's dividend is whether the current payout levels are feasible.

Having distributed dividends for at least 10 years, Western New England Bancorp has a long history of paying out a part of its earnings to shareholders. Using data from its latest earnings report, Western New England Bancorp's payout ratio sits at 22%, an extremely comfortable number that shows that it can pay its dividend.

The next 3 years are set to see EPS grow by 29.5%. The future payout ratio could be 21% over that time period, according to analyst estimates, which is a good look for the future of the dividend.

Dividend Volatility

Although the company has a long dividend history, it has been cut at least once in the last 10 years. Since 2012, the dividend has gone from $0.54 total annually to $0.24. The dividend has shrunk at around 7.8% a year during that period. A company that decreases its dividend over time generally isn't what we are looking for.

The Dividend Looks Likely To Grow

Given that dividend payments have been shrinking like a glacier in a warming world, we need to check if there are some bright spots on the horizon. We are encouraged to see that Western New England Bancorp has grown earnings per share at 16% per year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for Western New England Bancorp's prospects of growing its dividend payments in the future.

We Really Like Western New England Bancorp'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. Earnings are easily covering distributions, and the company is generating plenty of cash. All in all, this checks a lot of the boxes we look for when choosing an income stock.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. 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 Western New England Bancorp 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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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.