Western Alliance Bancorporation (NYSE:WAL) Is Paying Out A Dividend Of $0.36

The board of Western Alliance Bancorporation (NYSE:WAL) has announced that it will pay a dividend on the 25th of August, with investors receiving $0.36 per share. Based on this payment, the dividend yield will be 2.7%, which is fairly typical 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 Western Alliance Bancorporation's stock price has increased by 94% 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 Western Alliance Bancorporation

Western Alliance Bancorporation's Dividend Forecasted To Be Well Covered By Earnings

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

Western Alliance Bancorporation is just starting to establish itself as being able to pay dividends to shareholders, given its short 4-year history of distributing earnings. While it has a shorter history of paying out dividends, Western Alliance Bancorporation's payout ratio of 17% is a great sign for current shareholders, as this means that earnings greatly cover dividends.

The next 3 years are set to see EPS grow by 14.3%. Analysts forecast the future payout ratio could be 16% over the same time horizon, which is a number we think the company can maintain.

Western Alliance Bancorporation Is Still Building Its Track Record

Looking back, the dividend has been stable, but the company hasn't been paying a dividend for very long so we can't be confident that the dividend will remain stable through all economic environments. Since 2019, the dividend has gone from $1.00 total annually to $1.44. This implies that the company grew its distributions at a yearly rate of about 9.5% over that duration. Investors will likely want to see a longer track record of growth before making decision to add this to their income portfolio.

The Dividend Looks Likely To Grow

Investors could be attracted to the stock based on the quality of its payment history. We are encouraged to see that Western Alliance Bancorporation has grown earnings per share at 18% per year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for Western Alliance Bancorporation's prospects of growing its dividend payments in the future.

We Really Like Western Alliance Bancorporation's Dividend

Overall, we like to see the dividend staying consistent, and we think Western Alliance Bancorporation might even raise payments in the future. Earnings are easily covering distributions, and the company is generating plenty of cash. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. To that end, Western Alliance Bancorporation has 2 warning signs (and 1 which makes us a bit uncomfortable) we think you should know about. Is Western Alliance Bancorporation not quite the opportunity you were looking for? Why not check out our selection of top 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.