Stock Analysis

Community Bank System's (NYSE:CBU) Dividend Will Be Increased To $0.44

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NYSE:CBU
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Community Bank System, Inc. (NYSE:CBU) has announced that it will be increasing its periodic dividend on the 10th of October to $0.44, which will be 2.3% higher than last year's comparable payment amount of $0.43. This takes the annual payment to 2.6% of the current stock price, which is about average for the industry.

See our latest analysis for Community Bank System

Community Bank System's Payment Expected To Have Solid Earnings Coverage

We aren't too impressed by dividend yields unless they can be sustained over time.

Community Bank System has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. Based on Community Bank System's last earnings report, the payout ratio is at a decent 50%, 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 18.3% over the next 3 years. The future payout ratio could be 46% over that time period, according to analyst estimates, which is a good look for the future of the dividend.

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NYSE:CBU Historic Dividend July 24th 2022

Community Bank System Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. The dividend has gone from an annual total of $1.04 in 2012 to the most recent total annual payment of $1.72. This means that it has been growing its distributions at 5.2% per annum over that time. Companies like this can be very valuable over the long term, if the decent rate of growth can be maintained.

Community Bank System Could Grow Its Dividend

Investors could be attracted to the stock based on the quality of its payment history. We are encouraged to see that Community Bank System has grown earnings per share at 7.6% per year over the past five years. The company is paying a reasonable amount of earnings to shareholders, and is growing earnings at a decent rate so we think it could be a decent dividend stock.

Community Bank System Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that Community Bank System is a strong income stock thanks to its track record and growing earnings. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All in all, this checks a lot of the boxes we look for when choosing an income stock.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. As an example, we've identified 1 warning sign for Community Bank System that you should be aware of before investing. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

What are the risks and opportunities for Community Bank System?

Community Bank System, Inc. operates as the bank holding company for Community Bank, N.A.

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Rewards

  • Trading at 6.8% below our estimate of its fair value

  • Earnings are forecast to grow 4.85% per year

Risks

No risks detected for CBU from our risks checks.

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Community Bank System

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