TrustCo Bank Corp NY (NASDAQ:TRST) has announced that it will pay a dividend of $0.36 per share on the 1st of April. Based on this payment, the dividend yield on the company's stock will be 4.4%, which is an attractive boost to shareholder returns.
View our latest analysis for TrustCo Bank Corp NY
TrustCo Bank Corp NY's Dividend Forecasted To Be Well Covered By Earnings
If the payments aren't sustainable, a high yield for a few years won't matter that much.
Having distributed dividends for at least 10 years, TrustCo Bank Corp NY has a long history of paying out a part of its earnings to shareholders. Based on TrustCo Bank Corp NY'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 could fall by 3.0% if the company can't turn things around from the last few years. If the dividend continues along the path it has been on recently, we estimate the future payout ratio could be 58%, which is definitely feasible to continue.
TrustCo Bank Corp NY Has A Solid Track Record
The company has an extended history of paying stable dividends. Since 2015, the dividend has gone from $1.31 total annually to $1.44. Its dividends have grown at less than 1% per annum over this time frame. Although we can't deny that the dividend has been remarkably stable in the past, the growth has been pretty muted.
Dividend Growth May Be Hard To Achieve
The company's investors will be pleased to have been receiving dividend income for some time. Let's not jump to conclusions as things might not be as good as they appear on the surface. Over the past five years, it looks as though TrustCo Bank Corp NY's EPS has declined at around 3.0% a year. Declining earnings will inevitably lead to the company paying a lower dividend in line with lower profits.
In Summary
Overall, we think TrustCo Bank Corp NY is a solid choice as a dividend stock, even though the dividend wasn't raised this year. 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.
It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Now, if you want to look closer, it would be worth checking out our free research on TrustCo Bank Corp NY management tenure, salary, and performance. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.
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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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