Associated Banc-Corp (NYSE:ASB) has announced that it will pay a dividend of $0.20 per share on the 15th of September. This makes the dividend yield 3.7%, which will augment investor returns quite nicely.

View our latest analysis for Associated Banc-Corp

Associated Banc-Corp's Earnings Will Easily Cover The Distributions

A big dividend yield for a few years doesn't mean much if it can't be sustained.

Having distributed dividends for at least 10 years, Associated Banc-Corp has a long history of paying out a part of its earnings to shareholders. Taking data from its last earnings report, calculating for the company's payout ratio shows 38%, which means that Associated Banc-Corp would be able to pay its last dividend without pressure on the balance sheet.

The next year is set to see EPS grow by 24.3%. If the dividend continues on this path, the future payout ratio could be 34% by next year, which we think can be pretty sustainable going forward.

Associated Banc-Corp Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2012, the dividend has gone from $0.04 total annually to $0.80. This means that it has been growing its distributions at 35% per annum over that time. It is good to see that there has been strong dividend growth, and that there haven't been any cuts for a long time.

Associated Banc-Corp Could Grow Its Dividend

Investors could be attracted to the stock based on the quality of its payment history. Associated Banc-Corp has seen EPS rising for the last five years, at 8.4% per annum. Associated Banc-Corp definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

Associated Banc-Corp Looks Like A Great Dividend Stock

Overall, we think that this is a great income investment, and we think that maintaining the dividend this year may have been a conservative choice. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All of these factors considered, we think this has solid potential as a dividend stock.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Earnings growth generally bodes well for the future value of company dividend payments. See if the 9 Associated Banc-Corp analysts we track are forecasting continued growth with our free report on analyst estimates for the company. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

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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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