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Amerant Bancorp Inc. (NYSE:AMTB) will pay a dividend of $0.09 on the 30th of May. This payment means the dividend yield will be 2.0%, which is below the average for the industry.
Amerant Bancorp Not Expected To Earn Enough To Cover Its Payments
It would be nice for the yield to be higher, but we should also check if higher levels of dividend payment would be sustainable.
Having paid out dividends for only 3 years, Amerant Bancorp does not have much of a history being a dividend paying company. But while Amerant Bancorp was able to sustain its dividend for a decent period of time, its most recent earnings report shows that the company didn't have enough earnings to cover their dividends. This is worrying for investors as it points to Amerant Bancorp's dividends being unsustainable in the long term.
The next 12 months is set to see EPS grow by 101.2%. However, if the dividend continues along recent trends, it could start putting pressure on the balance sheet with the payout ratio getting very high over the next year.
See our latest analysis for Amerant Bancorp
Amerant Bancorp Is Still Building Its Track Record
The company has maintained a consistent dividend for a few years now, but we would like to see a longer track record before relying on it. The annual payment during the last 3 years was $0.24 in 2022, and the most recent fiscal year payment was $0.36. This implies that the company grew its distributions at a yearly rate of about 14% over that duration. 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.
The Dividend Has Limited Growth Potential
Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Unfortunately things aren't as good as they seem. Earnings per share has been sinking by 11% 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. It's not all bad news though, as the earnings are predicted to rise over the next 12 months - we would just be a bit cautious until this becomes a long term trend.
An additional note is that the company has been raising capital by issuing stock equal to 25% 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.