Cathay General Bancorp (NASDAQ: CATY) recently announced its intention to pay a dividend of $0.34 per share on December 11th, with a dividend yield of 3.7%. This news has sparked interest among investors, prompting them to evaluate the sustainability of the company’s dividend. In this article, we will delve into the factors that contribute to Cathay General Bancorp’s ability to maintain its dividend payout.
One of the key indicators of a sustainable dividend is a consistent track record. Cathay General Bancorp has a solid history of distributing earnings to shareholders, spanning over a decade. Although past distributions are not a guarantee of future ones, the company’s payout ratio of 27% is reassuring, as it indicates that earnings adequately cover dividends. Furthermore, analysts forecast that the payout ratio will increase to 32% over the next three years, which falls within a comfortable range for dividend sustainability.
Looking at the company’s dividend growth, Cathay General Bancorp has demonstrated remarkable stability over the years. Since 2013, the annual dividend has increased from $0.04 to the current level of $1.36, representing a growth rate of 42% per annum. This consistent dividend growth is a positive sign for investors, as it indicates the company’s commitment to rewarding shareholders.
The future outlook for Cathay General Bancorp’s dividend appears promising. The company has experienced a steady rise in earnings per share (EPS) over the past five years, averaging 12% annual growth. A growing EPS is a positive indicator for a sustainable dividend, especially when combined with the company’s low payout ratio. These factors suggest that Cathay General Bancorp can continue to generate ample cash flow to support its dividend payments.
In conclusion, the sustainability of Cathay General Bancorp’s dividend seems favorable. The company’s track record of consistent distributions, coupled with a healthy payout ratio and a history of dividend growth, instills confidence in investors. However, it is essential to note that future earnings are expected to decline, which may lead to some volatility in the near term. As always, investors should consider various factors and conduct thorough research before making any investment decisions.
FAQs
What is Cathay General Bancorp’s dividend yield?
Cathay General Bancorp currently offers a dividend yield of 3.7%, which is in line with industry averages.
Is Cathay General Bancorp’s dividend sustainable?
Cathay General Bancorp has a track record of consistent dividend payouts and a low payout ratio, indicating that its dividend is sustainable. Analysts also forecast an increase in the payout ratio over the next three years, further supporting the sustainability of the dividend.
Has Cathay General Bancorp experienced dividend growth?
Yes, Cathay General Bancorp has shown remarkable dividend growth over the years. The annual dividend has increased from $0.04 in 2013 to $1.36 currently, reflecting a growth rate of 42% per annum.
Does Cathay General Bancorp have positive earnings growth?
Cathay General Bancorp has experienced positive earnings growth, with EPS rising by an average of 12% per annum over the past five years. This growth in earnings is a positive indicator for the sustainability of the dividend.
What should investors consider before investing in Cathay General Bancorp?
While Cathay General Bancorp’s dividend appears to be sustainable, investors should consider various factors before making investment decisions. These factors include the company’s future earnings outlook, market conditions, and overall financial health. Conducting thorough research and seeking professional advice is crucial in making informed investment choices.