Associated Banc-Corp (NYSE:ASB) Is Increasing Its Dividend To $0.21

Associated Banc-Corp (NYSE:ASB) will increase its dividend from last year's comparable payment on the 15th of September to $0.21. This will take the dividend yield to an attractive 5.0%, providing a nice boost to shareholder returns.

See our latest analysis for Associated Banc-Corp

Associated Banc-Corp's Payment Expected To Have Solid Earnings Coverage

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable.

Having distributed dividends for at least 10 years, Associated Banc-Corp has a long history of paying out a part of its earnings to shareholders. Past distributions do not necessarily guarantee future ones, but Associated Banc-Corp's payout ratio of 33% is a good sign as this means that earnings decently cover dividends.

Over the next 3 years, EPS is forecast to fall by 21.7%. Fortunately, analysts forecast the future payout ratio to be 44% over the same time horizon, which is in the range that makes us comfortable with the sustainability of the dividend.

Associated Banc-Corp Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. Since 2013, the annual payment back then was $0.32, compared to the most recent full-year payment of $0.84. This works out to be a compound annual growth rate (CAGR) of approximately 10% a year over that time. It is good to see that there has been strong dividend growth, and that there haven't been any cuts for a long time.

Associated Banc-Corp Could Grow Its Dividend

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Associated Banc-Corp has seen EPS rising for the last five years, at 9.2% per annum. Associated Banc-Corp definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

We Really Like Associated Banc-Corp's Dividend

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. The distributions are easily covered by earnings, and there is plenty of cash being generated as well. However, it is worth noting that the earnings are expected to fall over the next year, which may not change the long term outlook, but could affect the dividend payment in the next 12 months. 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. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For instance, we've picked out 1 warning sign for Associated Banc-Corp that investors should take into consideration. Is Associated Banc-Corp 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.