Stock Analysis

Webster Financial (NYSE:WBS) Has Announced A Dividend Of US$0.40

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NYSE:WBS
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Webster Financial Corporation (NYSE:WBS) has announced that it will pay a dividend of US$0.40 per share on the 17th of August. The dividend yield will be 3.4% based on this payment which is still above the industry average.

Check out our latest analysis for Webster Financial

Webster Financial's Earnings Easily Cover the Distributions

If the payments aren't sustainable, a high yield for a few years won't matter that much. Based on the last payment, Webster Financial was quite comfortably earning enough to cover the dividend. This indicates that a lot of the earnings are being reinvested into the business, with the aim of fueling growth.

Over the next year, EPS is forecast to expand by 14.6%. If the dividend continues along recent trends, we estimate the payout ratio will be 50%, which is in the range that makes us comfortable with the sustainability of the dividend.

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NYSE:WBS Historic Dividend July 23rd 2021

Webster Financial Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2011, the first annual payment was US$0.04, compared to the most recent full-year payment of US$1.60. This means that it has been growing its distributions at 45% per annum over that time. It is good to see that there has been strong dividend growth, and that there haven't been any cuts for a long time.

We Could See Webster Financial's Dividend Growing

Investors could be attracted to the stock based on the quality of its payment history. Webster Financial has impressed us by growing EPS at 8.1% per year over the past five years. Since earnings per share is growing at an acceptable rate, and the payout policy is balanced, we think the company is positioning itself well to grow earnings and dividends in the future.

We Really Like Webster Financial's Dividend

Overall, we like to see the dividend staying consistent, and we think Webster Financial might even raise payments in the future. 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. However, there are other things to consider for investors when analysing stock performance. Earnings growth generally bodes well for the future value of company dividend payments. See if the 9 Webster Financial analysts we track are forecasting continued growth with our free report on analyst estimates for the company. Looking for more high-yielding dividend ideas? Try our curated list of strong dividend payers.

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