Webster Financial (NYSE:WBS) Is Paying Out A Dividend Of $0.40

Webster Financial Corporation (NYSE:WBS) has announced that it will pay a dividend of $0.40 per share on the 8th of August. This payment means that the dividend yield will be 3.3%, which is around the industry average.

See our latest analysis for Webster Financial

Webster Financial's Dividend Forecasted To Be Well Covered By Earnings

We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue.

Having distributed dividends for at least 10 years, Webster Financial has a long history of paying out a part of its earnings to shareholders. Based on Webster Financial's last earnings report, the payout ratio is at a decent 33%, meaning that the company is able to pay out its dividend with a bit of room to spare.

The next 3 years are set to see EPS grow by 41.6%. Analysts forecast the future payout ratio could be 26% over the same time horizon, which is a number we think the company can maintain.

Webster Financial Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2014, the annual payment back then was $0.60, compared to the most recent full-year payment of $1.60. This implies that the company grew its distributions at a yearly rate of about 10% over that duration. It is good to see that there has been strong dividend growth, and that there haven't been any cuts for a long time.

The Dividend's Growth Prospects Are Limited

Investors could be attracted to the stock based on the quality of its payment history. Earnings has been rising at 3.9% per annum over the last five years, which admittedly is a bit slow. While growth may be thin on the ground, Webster Financial could always pay out a higher proportion of earnings to increase shareholder returns.

Webster Financial Looks Like A Great Dividend Stock

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. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Companies that are growing earnings tend to be the best dividend stocks over the long term. See what the 13 analysts we track are forecasting for Webster Financial for free with public analyst estimates for the company. 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.

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