Cadence Bank (NYSE:CADE) Will Pay A Larger Dividend Than Last Year At $0.25

Cadence Bank's (NYSE:CADE) periodic dividend will be increasing on the 1st of April to $0.25, with investors receiving 6.4% more than last year's $0.235. The payment will take the dividend yield to 3.2%, which is in line with the average for the industry.

While the dividend yield is important for income investors, it is also important to consider any large share price moves, as this will generally outweigh any gains from distributions. Investors will be pleased to see that Cadence Bank's stock price has increased by 40% in the last 3 months, which is good for shareholders and can also explain a decrease in the dividend yield.

See our latest analysis for Cadence Bank

Cadence Bank's Payment Expected To Have Solid Earnings Coverage

We like a dividend to be consistent over the long term, so checking whether it is sustainable is important.

Having distributed dividends for at least 10 years, Cadence Bank has a long history of paying out a part of its earnings to shareholders. Past distributions do not necessarily guarantee future ones, but Cadence Bank's payout ratio of 45% is a good sign as this means that earnings decently cover dividends.

Looking forward, earnings per share is forecast to fall by 4.1% over the next 3 years. However, as estimated by analysts, the future payout ratio could be 36% over the same time period, which we think the company can easily maintain.

Cadence Bank Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. The dividend has gone from an annual total of $0.04 in 2014 to the most recent total annual payment of $0.94. This means that it has been growing its distributions at 37% per annum over that time. Rapidly growing dividends for a long time is a very valuable feature for an income stock.

Cadence Bank May Find It Hard To Grow The Dividend

The company's investors will be pleased to have been receiving dividend income for some time. Let's not jump to conclusions as things might not be as good as they appear on the surface. Unfortunately, Cadence Bank's earnings per share has been essentially flat over the past five years, which means the dividend may not be increased each year.

In Summary

Overall, it's great to see the dividend being raised and that it is still in a sustainable range. With shrinking earnings, the company may see some issues maintaining the dividend even though they look pretty sustainable for now. The dividend looks okay, but there have been some issues in the past, so we would be a little bit cautious.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. To that end, Cadence Bank has 2 warning signs (and 1 which is a bit concerning) 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.