WesBanco (NASDAQ:WSBC) Is Increasing Its Dividend To $0.38

The board of WesBanco, Inc. (NASDAQ:WSBC) has announced that it will be increasing its dividend by 2.7% on the 2nd of January to $0.38, up from last year's comparable payment of $0.37. This will take the dividend yield to an attractive 4.7%, providing a nice boost to shareholder returns.

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WesBanco's Earnings Will Easily Cover The Distributions

A big dividend yield for a few years doesn't mean much if it can't be sustained.

Having distributed dividends for at least 10 years, WesBanco has a long history of paying out a part of its earnings to shareholders. Past distributions do not necessarily guarantee future ones, but WesBanco's payout ratio of 72% is a good sign as this means that earnings decently cover dividends.

Over the next 3 years, EPS is forecast to expand by 141.7%. The future payout ratio could be 39% over that time period, according to analyst estimates, which is a good look for the future of the dividend.

See our latest analysis for WesBanco

WesBanco Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. Since 2015, the dividend has gone from $0.92 total annually to $1.48. This works out to be a compound annual growth rate (CAGR) of approximately 4.9% 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.

WesBanco May Find It Hard To Grow The Dividend

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. However, WesBanco has only grown its earnings per share at 2.1% per annum over the past five years. There are exceptions, but limited earnings growth and a high payout ratio can signal that a company has reached maturity. When a company prefers to pay out cash to its shareholders instead of reinvesting it, this can often say a lot about that company's dividend prospects.

An additional note is that the company has been raising capital by issuing stock equal to 44% of shares outstanding in the last 12 months. Trying to grow the dividend when issuing new shares reminds us of the ancient Greek tale of Sisyphus - perpetually pushing a boulder uphill. Companies that consistently issue new shares are often suboptimal from a dividend perspective.

WesBanco Looks Like A Great Dividend Stock

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. Distributions are quite easily covered by earnings, which are also being converted to cash flows. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. To that end, WesBanco has 2 warning signs (and 1 which is potentially serious) we think you should know about. 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.