United Community Banks (NYSE:UCB) Has Affirmed Its Dividend Of $0.24

United Community Banks, Inc. (NYSE:UCB) has announced that it will pay a dividend of $0.24 per share on the 3rd of July. Based on this payment, the dividend yield will be 3.2%, which is fairly typical for the industry.

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United Community Banks' 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.

United Community Banks has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. Taking data from its last earnings report, calculating for the company's payout ratio shows 45%, which means that United Community Banks would be able to pay its last dividend without pressure on the balance sheet.

The next year is set to see EPS grow by 13.7%. Assuming the dividend continues along recent trends, we think the future payout ratio could be 47% by next year, which is in a pretty sustainable range.

Check out our latest analysis for United Community Banks

United Community Banks Has A Solid Track Record

The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. Since 2015, the dividend has gone from $0.12 total annually to $0.96. This implies that the company grew its distributions at a yearly rate of about 23% over that duration. Rapidly growing dividends for a long time is a very valuable feature for an income stock.

Dividend Growth May Be Hard To Achieve

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Unfortunately things aren't as good as they seem. However, United Community Banks' EPS was effectively flat over the past five years, which could stop the company from paying more every year.

In Summary

Overall, a consistent dividend is a good thing, and we think that United Community Banks has the ability to continue this into the future. While the payments look sustainable for now, earnings have been shrinking so the dividend could come under pressure in the future. The dividend looks okay, but there have been some issues in the past, so we would be a little bit cautious.

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. Without at least some growth in earnings per share over time, the dividend will eventually come under pressure either from competition or inflation. Very few businesses see earnings consistently shrink year after year in perpetuity though, and so it might be worth seeing what the 7 analysts we track are forecasting for the future. 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.