Unveiling the Dividend Prowess of Valley National Bancorp
Valley National Bancorp (VLY, Financial) recently announced a dividend of $0.11 per share, payable on 2023-10-02, with the ex-dividend date set for 2023-09-13. 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 Valley National Bancorp's dividend performance and assess its sustainability.
What Does Valley National Bancorp Do?
Valley National Bancorp is a bank holding company whose principal wholly-owned subsidiary is Valley National Bank. It provides a full range of commercial, retail, and trust and investment services largely through its offices and ATM network throughout northern and central New Jersey, New York City and Long Island, Florida, and Alabama. The segments of the group are commercial lending, consumer lending, investment management, and corporate and other adjustments, of which key interest income is derived from the commercial lending segment. In recent years, the company has focused on acquiring companies that operate outside of traditional banking and has emphasized wealth and capital management.
A Glimpse at Valley National Bancorp's Dividend History
Valley National Bancorp has maintained a consistent dividend payment record since 1984. Dividends are currently distributed on a quarterly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Valley National Bancorp's Dividend Yield and Growth
As of today, Valley National Bancorp currently has a 12-month trailing dividend yield of 4.81% and a 12-month forward dividend yield of 4.81%. This suggests an expectation of same dividend payments over the next 12 months. And over the past decade, Valley National Bancorp's annual dividends per share growth rate stands at -2.90%. Based on Valley National Bancorp's dividend yield and five-year growth rate, the 5-year yield on cost of Valley National Bancorp stock as of today is approximately 4.81%.
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, Valley National Bancorp's dividend payout ratio is 0.35.
Valley National Bancorp's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Valley National Bancorp's profitability 5 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. Valley National Bancorp's growth rank of 5 out of 10 suggests that the company has a fair growth outlook.
Revenue is the lifeblood of any company, and Valley National Bancorp's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Valley National Bancorp's revenue has increased by approximately 5.30% per year on average, a rate that underperforms than approximately 55.83% 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, Valley National Bancorp's earnings increased by approximately 9.40% per year on average, a rate that underperforms than approximately 47.12% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 14.20%, which underperforms than approximately 31.4% of global competitors.
Next Steps
Given Valley National Bancorp's consistent dividend payments, reasonable payout ratio, fair profitability and growth metrics, it appears to be a reliable dividend payer. However, investors should carefully monitor the company's growth rates and profitability to ensure the sustainability of future dividends. GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
