CNB Financial (NASDAQ:CCNE) Has Announced That It Will Be Increasing Its Dividend To $0.19

The board of CNB Financial Corporation (NASDAQ:CCNE) has announced that the dividend on 13th of March will be increased to $0.19, which will be 5.6% higher than last year’s payment of $0.18 which covered the same period. Even though the dividend went up, the yield is still quite low at only 2.4%.

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The dividend yield is a little bit low, but sustainability of the payments is also an important part of evaluating an income stock.

CNB Financial has a long history of paying out dividends, with its current track record at a minimum of 10 years. Taking data from its last earnings report, calculating for the company’s payout ratio shows 29%, which means that CNB Financial would be able to pay its last dividend without pressure on the balance sheet.

Looking forward, EPS is forecast to rise by 79.9% over the next 3 years. The future payout ratio could be 19% over that time period, according to analyst estimates, which is a good look for the future of the dividend.

Check out our latest analysis for CNB Financial

Even over a long history of paying dividends, the company’s distributions have been remarkably stable. Since 2016, the dividend has gone from $0.66 total annually to $0.72. Dividend payments have been growing, but very slowly over the period. Dividends have grown relatively slowly, which is not great, but some investors may value the relative consistency of the dividend.

The company’s investors will be pleased to have been receiving dividend income for some time. However, CNB Financial’s EPS was effectively flat over the past five years, which could stop the company from paying more every year. While growth may be thin on the ground, CNB Financial could always pay out a higher proportion of earnings to increase shareholder returns.

An additional note is that the company has been raising capital by issuing stock equal to 40% of shares outstanding in the last 12 months. Trying to grow the dividend when issuing new shares reminds us of the ancient Greek tale of Sisyphus – perpetually pushing a boulder uphill. Companies that consistently issue new shares are often suboptimal from a dividend perspective.

Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All of these factors considered, we think this has solid potential as a dividend stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. However, there are other things to consider for investors when analysing stock performance. For example, we’ve identified 2 warning signs for CNB Financial (1 is concerning!) that you should be aware of before investing. Is CNB Financial 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.