Wintrust Financial (NASDAQ:WTFC) Will Pay A Larger Dividend Than Last Year At $0.40

Wintrust Financial Corporation's (NASDAQ:WTFC) dividend will be increasing from last year's payment of the same period to $0.40 on 25th of May. Although the dividend is now higher, the yield is only 2.4%, which is below the industry average.

View our latest analysis for Wintrust Financial

Wintrust Financial's Dividend Forecasted To Be Well Covered By Earnings

The dividend yield is a little bit low, but sustainability of the payments is also an important part of evaluating an income stock.

Wintrust Financial has a long history of paying out dividends, with its current track record at a minimum of 10 years. While past records don't necessarily translate into future results, the company's payout ratio of 16% also shows that Wintrust Financial is able to comfortably pay dividends.

Over the next 3 years, EPS is forecast to fall by 9.9%. Fortunately, analysts forecast the future payout ratio to be 18% over the same time horizon, which is in the range that makes us comfortable with the sustainability of the dividend.

Wintrust Financial 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. Since 2013, the annual payment back then was $0.18, compared to the most recent full-year payment of $1.60. This implies that the company grew its distributions at a yearly rate of about 24% over that duration. We can see that payments have shown some very nice upward momentum without faltering, which provides some reassurance that future payments will also be reliable.

The Dividend Looks Likely To Grow

The company's investors will be pleased to have been receiving dividend income for some time. Wintrust Financial has seen EPS rising for the last five years, at 12% per annum. Wintrust Financial definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

Wintrust Financial 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. The earnings easily cover the company's distributions, and the company is generating plenty of cash. If earnings do fall over the next 12 months, the dividend could be buffeted a little bit, but we don't think it should cause too much of a problem in the long term. 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. However, there are other things to consider for investors when analysing stock performance. To that end, Wintrust Financial has 2 warning signs (and 1 which doesn't sit too well with us) we think you should know about. Is Wintrust Financial not quite the opportunity you were looking for? Why not check out our selection of top 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.