An in-depth analysis of Washington Trust Bancorp Inc's dividend performance, yield, growth rate and sustainability.
Washington Trust Bancorp Inc(WASH, Financial) recently announced a dividend of $0.56 per share, payable on 2023-10-12, with the ex-dividend date set for 2023-09-29. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's deep dive into Washington Trust Bancorp Inc's dividend performance and assess its sustainability.
What Does Washington Trust Bancorp Inc Do?
Washington Trust Bancorp Inc, through its subsidiaries, offers banking and financial services to individuals and businesses. It operates in two segments. The Commercial Banking segment includes lending activities, commercial loans, residential real estate loan deposit activities, and others. The Wealth Management Services segment consists of investment management, financial planning, personal trust, and estate services including services as trustee, personal representative, custodian and guardian, and settlement of decedents' estates. The bank generates a majority of its revenue from the Commercial Banking segment.
A Glimpse at Washington Trust Bancorp Inc's Dividend History
Washington Trust Bancorp Inc has maintained a consistent dividend payment record since 1987. Dividends are currently distributed on a quarterly basis. Washington Trust Bancorp Inc has increased its dividend each year since 1991. The stock is thus listed as a dividend aristocrat, an honor that is given to companies that have increased their dividend each year for at least the past 32 years.
Breaking Down Washington Trust Bancorp Inc's Dividend Yield and Growth
As of today, Washington Trust Bancorp Inc currently has a 12-month trailing dividend yield of 8.12% and a 12-month forward dividend yield of 8.20%. This suggests an expectation of increase dividend payments over the next 12 months.
Over the past three years, Washington Trust Bancorp Inc's annual dividend growth rate was 2.90%. Extended to a five-year horizon, this rate increased to 6.80% per year. And over the past decade, Washington Trust Bancorp Inc's annual dividends per share growth rate stands at 9.10%.
Based on Washington Trust Bancorp Inc's dividend yield and five-year growth rate, the 5-year yield on cost of Washington Trust Bancorp Inc stock as of today is approximately 11.28%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-06-30, Washington Trust Bancorp Inc's dividend payout ratio is 0.65.
Washington Trust Bancorp Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Washington Trust Bancorp Inc's profitability 6 out of 10 as of 2023-06-30, suggesting fair profitability. The company has reported positive net income for each of year over the past decade, further solidifying its high profitability.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Washington Trust Bancorp Inc's growth rank of 6 out of 10 suggests that the company has a fair growth outlook.
Revenue is the lifeblood of any company, and Washington Trust Bancorp Inc's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Washington Trust Bancorp Inc's revenue has increased by approximately 3.00% per year on average, a rate that underperforms than approximately 70.19% of global competitors.
The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, Washington Trust Bancorp Inc's earnings increased by approximately 1.20% per year on average, a rate that underperforms than approximately 74.24% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 7.60%, which underperforms than approximately 52.25% of global competitors.
Conclusion
Washington Trust Bancorp Inc has demonstrated a strong commitment to its shareholders through consistent dividend payments and growth over the past decades. However, investors should monitor the company's payout ratio, profitability, and growth metrics to ensure the sustainability of these dividends. While the company's dividend yield and growth rates are attractive, its underperformance in revenue and earnings growth compared to global competitors may warrant further investigation. Remember, a comprehensive understanding of a company's financial health is crucial in making informed investment decisions.
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