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AmeriServ Financial’s (NASDAQ:ASRV) Dividend Will Be $0.03
The board of AmeriServ Financial, Inc. (NASDAQ:ASRV) has announced that it will pay a dividend of $0.03 per share on the 18th of November. This makes the dividend yield 4.3%, which will augment investor returns quite nicely.
Check out our latest analysis for AmeriServ Financial
AmeriServ Financial Might Find It Hard To Continue The Dividend
While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable.
AmeriServ Financial has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. Despite this history however, the company’s latest earnings report actually shows that it didn’t have enough earnings to cover its dividends. This is very worrying for shareholders, as this shows that AmeriServ Financial will not be able to sustain its dividend at its current rate.
Looking forward, earnings per share could 29.0% over the next year if the trend of the last few years can’t be broken. This means the company will be unprofitable and managers could face the tough choice between continuing to pay the dividend or taking pressure off the balance sheet.
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AmeriServ Financial Has A Solid Track Record
The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. Since 2014, the dividend has gone from $0.04 total annually to $0.12. This implies that the company grew its distributions at a yearly rate of about 12% over that duration. It is good to see that there has been strong dividend growth, and that there haven’t been any cuts for a long time.
The Dividend Has Limited Growth Potential
Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Let’s not jump to conclusions as things might not be as good as they appear on the surface. Earnings per share has been sinking by 29% over the last five years. This steep decline can indicate that the business is going through a tough time, which could constrain its ability to pay a larger dividend each year in the future.
AmeriServ Financial’s Dividend Doesn’t Look Sustainable
Overall, it’s nice to see a consistent dividend payment, but we think that longer term, the current level of payment might be unsustainable. We can’t deny that the payments have been very stable, but we are a little bit worried about the very high payout ratio. We don’t think AmeriServ Financial is a great stock to add to your portfolio if income is your focus.
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It’s important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. However, there are other things to consider for investors when analysing stock performance. To that end, AmeriServ Financial has 3 warning signs (and 1 which can’t be ignored) we think you should know about. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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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