The board of United Bankshares, Inc. (NASDAQ:UBSI) has announced that it will pay a dividend on the 2nd of January, with investors receiving $0.37 per share. This payment means that the dividend yield will be 3.5%, which is around the industry average.

See our latest analysis for United Bankshares

United Bankshares' Dividend Forecasted To Be Well Covered By Earnings

Unless the payments are sustainable, the dividend yield doesn't mean too much.

United Bankshares has a long history of paying out dividends, with its current track record at a minimum of 10 years. Based on United Bankshares' last earnings report, the payout ratio is at a decent 56%, meaning that the company is able to pay out its dividend with a bit of room to spare.

The next 3 years are set to see EPS grow by 16.6%. The future payout ratio could be 51% over that time period, according to analyst estimates, which is a good look for the future of the dividend.

United Bankshares Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. The annual payment during the last 10 years was $1.28 in 2014, and the most recent fiscal year payment was $1.48. This means that it has been growing its distributions at 1.5% per annum over that time. Slow and steady dividend growth might not sound that exciting, but dividends have been stable for ten years, which we think makes this a fairly attractive offer.

United Bankshares May Find It Hard To Grow The Dividend

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. However, United Bankshares' EPS was effectively flat over the past five years, which could stop the company from paying more every year. Growth of 0.7% per annum is not particularly high, which might explain why the company is paying out a higher proportion of earnings. This isn't bad in itself, but unless earnings growth pick up we wouldn't expect dividends to grow either.

United Bankshares Looks Like A Great Dividend Stock

In summary, it is good to see that the dividend is staying consistent, and we don't think there is any reason to suspect this might change over the medium term. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All in all, this checks a lot of the boxes we look for when choosing an income stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. However, there are other things to consider for investors when analysing stock performance. Earnings growth generally bodes well for the future value of company dividend payments. See if the 5 United Bankshares analysts we track are forecasting continued growth with our free report on analyst estimates for the company. Is United Bankshares not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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