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The board of Amerant Bancorp Inc. (NYSE:AMTB) has announced that it will pay a dividend of $0.09 per share on the 29th of November. The dividend yield is 1.7% based on this payment, which is a little bit low compared to the other companies in the industry.
Check out our latest analysis for Amerant Bancorp
Amerant Bancorp's Dividend Forecasted To Be Well Covered By Earnings
The dividend yield is a little bit low, but sustainability of the payments is also an important part of evaluating an income stock.
Having paid out dividends for only 3 years, Amerant Bancorp does not have much of a history being a dividend paying company. This is worrying for investors as it points to Amerant Bancorp's dividends being unsustainable in the long term.
Analysts expect a massive rise in earnings per share in the next 3 years. They also estimate that the future payout ratio will be 15% in the same time horizon, so there isn't too much pressure on the dividend.
Amerant Bancorp Is Still Building Its Track Record
The dividend hasn't seen any major cuts in the past, but the company has only been paying a dividend for 3 years, which isn't that long in the grand scheme of things. Since 2021, the annual payment back then was $0.24, compared to the most recent full-year payment of $0.36. This means that it has been growing its distributions at 14% per annum over that time. The dividend has been growing rapidly, however with such a short payment history we can't know for sure if payment can continue to grow over the long term, so caution may be warranted.
Dividend Growth May Be Hard To Achieve
Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. However, Amerant Bancorp's EPS was effectively flat over the past five years, which could stop the company from paying more every year. With EPS growth hard to come by and the company not turning a profit, we wouldn't be particularly optimistic about the growth prospects for Amerant Bancorp's dividend in the future.
We should note that Amerant Bancorp has issued stock equal to 26% of shares outstanding. 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.
Our Thoughts On Amerant Bancorp's Dividend
Overall, it's nice to see a consistent dividend payment, but we think that longer term, the current level of payment might be unsustainable. The payments are bit high to be considered sustainable, and the track record isn't the best. This company is not in the top tier of income providing stocks.