Stock Analysis

Community Bank System's (NYSE:CBU) Dividend Will Be Increased To US$0.43

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NYSE:CBU
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Community Bank System, Inc.'s (NYSE:CBU) dividend will be increasing to US$0.43 on 8th of October. This makes the dividend yield about the same as the industry average at 2.4%.

See our latest analysis for Community Bank System

Community Bank System's Payment Has Solid Earnings Coverage

We like a dividend to be consistent over the long term, so checking whether it is sustainable is important. Prior to this announcement, Community Bank System's dividend was comfortably covered by both cash flow and earnings. This means that a large portion of its earnings are being retained to grow the business.

Looking forward, earnings per share is forecast to rise by 0.5% over the next year. If the dividend continues on this path, the payout ratio could be 54% by next year, which we think can be pretty sustainable going forward.

historic-dividend
NYSE:CBU Historic Dividend July 25th 2021

Community Bank System 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 US$0.96 in 2011 to the most recent annual payment of US$1.72. This implies that the company grew its distributions at a yearly rate of about 6.0% over that duration. Companies like this can be very valuable over the long term, if the decent rate of growth can be maintained.

We Could See Community Bank System's Dividend Growing

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. It's encouraging to see Community Bank System has been growing its earnings per share at 8.3% a year over the past five years. Shareholders are getting plenty of the earnings returned to them, which combined with strong growth makes this quite appealing.

Community Bank System Looks Like A Great Dividend Stock

Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All of these factors considered, we think this has solid potential as a dividend stock.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Case in point: We've spotted 2 warning signs for Community Bank System (of which 1 doesn't sit too well with us!) you should know about. We have also put together a list of global stocks with a solid dividend.

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