Amerant Bancorp (NYSE:AMTB) Will Pay A Dividend Of $0.09

The board of Amerant Bancorp Inc. (NYSE:AMTB) has announced that it will pay a dividend on the 28th of November, with investors receiving $0.09 per share. Including this payment, the dividend yield on the stock will be 2.1%, which is a modest boost for shareholders' returns.

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Amerant Bancorp Not Expected To Earn Enough To Cover Its Payments

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

Amerant Bancorp has a short history of paying out dividends, with its current track record at only 4 years. But while Amerant Bancorp was able to sustain its dividend for a decent period of time, its most recent earnings report shows that the company didn't have enough earnings to cover their dividends. This is an alarming sign that could mean that Amerant Bancorp's dividend may no longer be sustainable for longer.

The next 12 months is set to see EPS grow by 92.9%. Assuming the dividend continues along recent trends, we think the payout ratio could get very high, which probably can't continue without starting to put some pressure on the balance sheet.

Check out our latest analysis for Amerant Bancorp

Amerant Bancorp Is Still Building Its Track Record

The dividend has been pretty stable looking back, but the company hasn't been paying one for very long. This makes it tough to judge how it would fare through a full economic cycle. Since 2021, the annual payment back then was $0.24, compared to the most recent full-year payment of $0.36. This means that it has been growing its distributions at 11% per annum over that time. The dividend has been growing rapidly, however with such a short payment history we can't know for sure if payment can continue to grow over the long term, so caution may be warranted.

Dividend Growth Potential Is Shaky

The company's investors will be pleased to have been receiving dividend income for some time. Unfortunately things aren't as good as they seem. Amerant Bancorp's EPS has fallen by approximately 23% per year during the past five years. A sharp decline in earnings per share is not great from from a dividend perspective. Even conservative payout ratios can come under pressure if earnings fall far enough. Over the next year, however, earnings are actually predicted to rise, but we would still be cautious until a track record of earnings growth can be built.

We're Not Big Fans Of Amerant Bancorp's Dividend

Overall, this isn't a great candidate as an income investment, even though the dividend was stable this year. The company's earnings aren't high enough to be making such big distributions, and it isn't backed up by strong growth or consistency either. Considering all of these factors, we wouldn't rely on this dividend if we wanted to live on the income.

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. As an example, we've identified 3 warning signs for Amerant Bancorp that you should be aware of before investing. Is Amerant Bancorp not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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