Camden National (NASDAQ:CAC) Is Due To Pay A Dividend Of $0.42

Camden National Corporation (NASDAQ:CAC) has announced that it will pay a dividend of $0.42 per share on the 31st of October. This makes the dividend yield 4.2%, which will augment investor returns quite nicely.

Check out our latest analysis for Camden National

Camden National’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, Camden National has a long history of paying out a part of its earnings to shareholders. Based on Camden National’s last earnings report, the payout ratio is at a decent 56%, meaning that the company is able to pay out its dividend with a bit of room to spare.

Looking forward, EPS is forecast to rise by 60.6% over the next 3 years. The future payout ratio could be 40% over that time period, according to analyst estimates, which is a good look for the future of the dividend.

Camden National Has A Solid Track Record

Even over a long history of paying dividends, the company’s distributions have been remarkably stable. The annual payment during the last 10 years was $0.72 in 2014, and the most recent fiscal year payment was $1.68. This works out to be a compound annual growth rate (CAGR) of approximately 8.8% a year 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’s Growth Prospects Are Limited

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Unfortunately things aren’t as good as they seem. Camden National has seen earnings per share falling at 3.4% per year over the last five years. If earnings continue declining, the company may have to make the difficult choice of reducing the dividend or even stopping it completely – the opposite of dividend growth. 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 can turn into a longer term trend.

Our Thoughts On Camden National’s Dividend

Overall, a consistent dividend is a good thing, and we think that Camden National has the ability to continue this into the future. While the payments look sustainable for now, earnings have been shrinking so the dividend could come under pressure in the future. This looks like it could be a good dividend stock going forward, but we would note that the payout ratio has been at higher levels in the past so it could happen again.

Story continues

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. Without at least some increase in earnings per share over time, the dividend will eventually come under pressure either from competition or inflation. See if the 3 analysts are forecasting a turnaround in our free collection of analyst estimates here. Is Camden National not quite the opportunity you were looking for? Why not check out ours selection of top dividend stocks.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.