Washington Trust Bancorp (NASDAQ: WASH) has announced a dividend of $0.56 per share, payable on July 11, translating to an attractive 8.2% dividend yield. While the high yield is a welcome bonus for income investors, analysts are raising concerns about the sustainability of the payout.
Despite a strong track record of over a decade of consistent dividend payments, the company’s latest earnings report shows dividends exceeded net earnings, a potential red flag. This indicates the dividend may not be maintainable if earnings don’t recover.
Encouragingly, earnings per share (EPS) are projected to jump 104.9% over the next year, which may ease some pressure. Since 2015, the dividend has grown at 6.8% annually, increasing from $1.16 to $2.24 per year, showing strong historical consistency.
However, EPS has fallen 22% per year over the past five years, and the company issued new shares equal to 13% of outstanding stock, which could dilute future returns. Issuing stock while increasing dividends may limit long-term shareholder value.
While the dividend appears stable, analysts caution that long-term sustainability is in doubt unless earnings growth becomes consistent. For now, WASH remains a mixed pick for income-focused investors.