Yahoo Finance East West Bancorp (NASDAQ:EWBC) Will Pay A Larger Dividend Than Last Year At $0.48
East West Bancorp, Inc. (NASDAQ:EWBC) has announced that it will be increasing its dividend from last year's comparable payment on the 15th of May to $0.48. Based on this payment, the dividend yield for the company will be 3.5%, which is fairly typical for the industry.
See our latest analysis for East West Bancorp
East West Bancorp's Dividend Forecasted To Be Well Covered By Earnings
We aren't too impressed by dividend yields unless they can be sustained over time.
East West Bancorp has a long history of paying out dividends, with its current track record at a minimum of 10 years. While past data isn't a guarantee for the future, East West Bancorp's latest earnings report puts its payout ratio at 20%, showing that the company can pay out its dividends comfortably.
Over the next 3 years, EPS is forecast to fall by 1.5%. Fortunately, analysts forecast the future payout ratio to be 26% over the same time horizon, which is in the range that makes us comfortable with the sustainability of the dividend.
East West Bancorp 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. The dividend has gone from an annual total of $0.40 in 2013 to the most recent total annual payment of $1.92. This means that it has been growing its distributions at 17% per annum over that time. We can see that payments have shown some very nice upward momentum without faltering, which provides some reassurance that future payments will also be reliable.
The Dividend Looks Likely To Grow
Investors could be attracted to the stock based on the quality of its payment history. It's encouraging to see that East West Bancorp has been growing its earnings per share at 19% a year over the past five years. Growth in EPS bodes well for the dividend, as does the low payout ratio that the company is currently reporting.
We Really Like East West Bancorp's Dividend
Overall, a dividend increase is always good, and we think that East West Bancorp is a strong income stock thanks to its track record and growing earnings. The company is generating plenty of cash, and the earnings also quite easily cover the distributions. If earnings do fall over the next 12 months, the dividend could be buffeted a little bit, but we don't think it should cause too much of a problem in the long term. All of these factors considered, we think this has solid potential as a dividend stock.
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. You can also discover whether shareholders are aligned with insider interests by checking our visualisation of insider shareholdings and trades in East West Bancorp stock. Is East West Bancorp 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.
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