Camden (CAC) Shares 2.9% Up on Dividend Hike: Worth a Look?
Camden (CAC) ups its quarterly cash dividend by 11.1%. Should you consider holding the stock in your portfolio based on its dividend income?
Camden National Corporation’s CAC board of directors has increased its quarterly dividend by 11%. CAC will now pay out a dividend of 40 cents per share, up from 36 cents paid out in the prior quarter. The raised dividend is payable Jan 31 to its shareholders of record as of Jan 14, 2022.
Led by this positive news, shares of Camden gained 2.9% in yesterday’s trading hours.
Based on the increased rate, the annual dividend came to $1.6 per share, resulting in an annualized dividend yield of 3.3%, considering Camden’s closing price of $48 as of Dec 22. The yield is not only attractive to income investors but also represents a steady income stream.
In April 2021, Camden upped the dividend by 9.1% to 36 cents per share.
Gregory A. Dufour, president and CEO of Camden, remarked, "A 21% increase in our quarterly dividend aligns with our focus on rewarding shareholders while maintaining sufficient capital levels."
Camden’s ability to sustain the hiked dividend depends on earnings growth. CAC’s past performance depicts a robust earnings picture. CAC’s earnings surpassed the consensus mark in three of the four trailing quarters, while missing in one. Over the last five years, CAC’s earnings grew at a 10.5% rate, significantly higher than the industry average of 8.6%. If the momentum likely continues in the upcoming period, such dividend payments will be sustainable.
CAC’s impressive balance sheet position supports such capital-deployment activities. As of the third-quarter end (Sep 30, 2021), Camden had $379.7 million in cash and cash equivalents, while its short-term borrowings aggregated $211.5 million.
In the first quarter of 2021, Camden initiated a new share repurchase program for up to 750,000 shares of its common stock. This buyback plan replaced the program halted in January 2021. For the nine months ended Sep 30, 2021, CAC repurchased 106,502 shares for $4.9 million. The share buyback plan indicates CAC’s ability to generate a strong cash flow and disciplined capital-deployment efforts, while simultaneously investing in its business to drive growth.
Camden’s stock looks undervalued concerning to the price-to-earnings ratio. It has a price/earnings (F1) ratio of 10.25 compared with the industry average of 10.80. Also, the price-cash flow ratio of 10.11 is below the industry average of 12.31.
CAC’s superior ROE of 13.18% compared with the industry average of 11.91% indicates its efficiency in generating profits over its peers.
Camden’s debt/equity ratio is 0.08 compared with the industry average of 0.23, reflecting a considerably lower debt burden. It highlights CAC’s sound financials even in varied economic cycles.
Thus, based on the above-mentioned positives, the stock seems worth holding on to. However, margin pressure due to low interest rates remains a major concern for CAC. Also, the uncertain economy is a headwind. Thus, you must consider these factors before making any decision.
The stock has declined 1.3% against its industry’s growth of 7.4% over the past six months.
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Camden carries a Zacks Rank #3 (Hold) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Other Companies Undertaking Similar Actions
Over the past few months, several banks have rewarded shareholders with dividend hikes, a few of which are Franklin Resources, Inc. BEN, Saratoga Investment Corp. SAR and Washington Trust Bancorp, Inc. WASH.
Franklin’s board of directors announced a sequential hike in its quarterly dividend by around 4%. BEN will pay out a dividend of 29 cents per share, up from 28 cents paid out in the prior quarter. The increased dividend will be paid out on Jan 14 to its shareholders of record as of Dec 31, 2021.
Franklin has a share-repurchase authorization in place. It repurchased 7.3 million shares for $208.2 million in fiscal 2021 (ended Sep 30, 2021). As of Sep 30, 2021, 30.9 million shares remained to be repurchased under the authorization of 80 million shares approved in April 2018.
Saratoga Investment’s board of directors announced a 1.9% sequential hike in dividend for the fiscal third quarter (ended Nov 30, 2021). SAR will now pay out a dividend of 53 cents per share, up from 52 cents paid out in the prior quarter.
The increased dividend will be paid out on Jan 19 to its shareholders of record as of Jan 4, 2022. This marks Saratoga Investment’s fourth dividend hike in fiscal 2022.
Washington Trust’s board of directors declared a quarterly dividend per share of 54 cents, indicating a sequential increase of two cents. The dividend will be paid out on Jan 7 to its shareholders of record as of Jan 3, 2022. The increase represents the eleventh consecutive year of a dividend hike.
In addition to the dividend hike, Washington Trust also has a share repurchase program in place. In November, WASH’s board of directors approved a repurchase of about 5% of its outstanding common stock or 850,000 shares. WASH’s new buyback plan expires on Dec 31, 2022. As of Oct 31, 2021, WASH had 17.3 million shares outstanding.
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Franklin Resources, Inc. (BEN): Free Stock Analysis Report
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Camden National Corporation (CAC): Free Stock Analysis Report
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