Associated Banc-Corp (NYSE:ASB) Is Increasing Its Dividend To $0.24
Associated Banc-Corp (NYSE:ASB) has announced an increase in its dividend to $0.24, payable on December 15, reflecting a 3.9% yield. The company has a strong dividend history, with a payout ratio of 92%, indicating sustainability. However, earnings per share have declined by 12% annually over the past five years, raising concerns about future dividend growth. Analysts forecast a 121% increase in EPS over the next three years, with a future payout ratio of 32%. While the dividend is stable, caution is advised for income-focused investors due to the high payout ratio and past earnings decline.
The board of Associated Banc-Corp (NYSE:ASB) has announced that it will be paying its dividend of $0.24 on the 15th of December, an increased payment from last year's comparable dividend. This takes the dividend yield to 3.9%, which shareholders will be pleased with.
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Associated Banc-Corp's Earnings Will Easily Cover The Distributions
While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable.
Having distributed dividends for at least 10 years, Associated Banc-Corp has a long history of paying out a part of its earnings to shareholders. Taking data from its last earnings report, calculating for the company's payout ratio shows 92%, which means that Associated Banc-Corp would be able to pay its last dividend without pressure on the balance sheet.
Looking forward, EPS is forecast to rise by 121.0% over the next 3 years. Analyst estimates also show the future payout ratio being 32% in the same 3 years which brings it into quite a comfortable range.
See our latest analysis for Associated Banc-Corp
Associated Banc-Corp Has A Solid Track Record
The company has a sustained record of paying dividends with very little fluctuation. Since 2015, the dividend has gone from $0.40 total annually to $0.96. This means that it has been growing its distributions at 9.1% per annum over that time. Dividends have grown at a reasonable rate over this period, and without any major cuts in the payment over time, we think this is an attractive combination as it provides a nice boost to shareholder returns.
The Dividend Has Limited Growth Potential
Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. However, things aren't all that rosy. Associated Banc-Corp's earnings per share has shrunk at 12% a year over the past five years. Such rapid declines definitely have the potential to constrain dividend payments if the trend continues into the future. It's not all bad news though, as the earnings are predicted to rise over the next 12 months - we would just be a bit cautious until this becomes a long term trend.
Our Thoughts On Associated Banc-Corp's Dividend
Overall, we always like to see the dividend being raised, but we don't think Associated Banc-Corp will make a great income stock. We can't deny that the payments have been very stable, but we are a little bit worried about the very high payout ratio. We would be a touch cautious of relying on this stock primarily for the dividend income.
Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For example, we've picked out 2 warning signs for Associated Banc-Corp that investors should know about before committing capital to this stock. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.
