Atlantic Union Bankshares (NYSE:AUB) Has Announced That It Will Be Increasing Its Dividend To $0.34

Atlantic Union Bankshares Corporation (NYSE:AUB) will increase its dividend on the 22nd of November to $0.34, which is 6.3% higher than last year's payment from the same period of $0.32. This takes the annual payment to 3.5% of the current stock price, which is about average for the industry.

See our latest analysis for Atlantic Union Bankshares

Atlantic Union Bankshares' Payment Expected To Have Solid Earnings Coverage

We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue.

Having distributed dividends for at least 10 years, Atlantic Union Bankshares has a long history of paying out a part of its earnings to shareholders. Based on Atlantic Union Bankshares' last earnings report, the payout ratio is at a decent 54%, meaning that the company is able to pay out its dividend with a bit of room to spare.

Looking forward, EPS is forecast to rise by 78.2% over the next 3 years. Analysts forecast the future payout ratio could be 36% over the same time horizon, which is a number we think the company can maintain.

Atlantic Union Bankshares Has A Solid Track Record

The company has an extended history of paying stable dividends. The dividend has gone from an annual total of $0.56 in 2014 to the most recent total annual payment of $1.28. This implies that the company grew its distributions at a yearly rate of about 8.6% over that duration. The dividend has been growing very nicely for a number of years, and has given its shareholders some nice income in their portfolios.

Atlantic Union Bankshares 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. Let's not jump to conclusions as things might not be as good as they appear on the surface. In the last five years, Atlantic Union Bankshares' earnings per share has shrunk at approximately 3.7% per annum. If earnings continue declining, the company may have to make the difficult choice of reducing the dividend or even stopping it completely - the opposite of dividend growth. Earnings are predicted to grow over the next year, but we would remain cautious until a track record of earnings growth is established.

We should note that Atlantic Union Bankshares has issued stock equal to 33% of shares outstanding. 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.

Our Thoughts On Atlantic Union Bankshares' Dividend

In summary, it's great to see that the company can raise the dividend and keep it in a sustainable range. The earnings coverage is acceptable for now, but with earnings on the decline we would definitely keep an eye on the payout ratio. The payment isn't stellar, but it could make a decent addition to a dividend portfolio.

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. For instance, we've picked out 1 warning sign for Atlantic Union Bankshares that investors should take into consideration. If you are a dividend investor, you might also want to look at our curated list of high yield 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.