Pathfinder Bancorp (NASDAQ:PBHC) Is Increasing Its Dividend To $0.10

Pathfinder Bancorp, Inc.'s (NASDAQ:PBHC) periodic dividend will be increasing on the 10th of May to $0.10, with investors receiving 11% more than last year's $0.09. This takes the annual payment to 2.9% of the current stock price, which is about average for the industry.

See our latest analysis for Pathfinder Bancorp

Pathfinder Bancorp's Dividend Forecasted To Be Well Covered By Earnings

While it is always good to see a solid dividend yield, we should also consider whether the payment is feasible.

Pathfinder Bancorp has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. Past distributions do not necessarily guarantee future ones, but Pathfinder Bancorp's payout ratio of 31% is a good sign as this means that earnings decently cover dividends.

Looking forward, earnings per share could rise by 3.6% over the next year if the trend from the last few years continues. If the dividend continues on this path, the future payout ratio could be 35% by next year, which we think can be pretty sustainable going forward.

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Pathfinder Bancorp Has A Solid Track Record

The company has an extended history of paying stable dividends. The annual payment during the last 10 years was $0.0729 in 2014, and the most recent fiscal year payment was $0.36. This means that it has been growing its distributions at 17% per annum over that time. It is good to see that there has been strong dividend growth, and that there haven't been any cuts for a long time.

Pathfinder Bancorp May Find It Hard To Grow The Dividend

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. However, Pathfinder Bancorp has only grown its earnings per share at 3.6% per annum over the past five years. While growth may be thin on the ground, Pathfinder Bancorp could always pay out a higher proportion of earnings to increase shareholder returns.

We Really Like Pathfinder Bancorp's Dividend

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All in all, this checks a lot of the boxes we look for when choosing an income stock.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For example, we've picked out 1 warning sign for Pathfinder Bancorp that investors should know about before committing capital to this stock. Is Pathfinder Bancorp 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.