The board of AmeriServ Financial, Inc. (NASDAQ:ASRV) has announced that it will pay a dividend of $0.03 per share on the 17th of February. This payment means that the dividend yield will be 3.6%, which is around the industry average.

AmeriServ Financial's Earnings Will Easily Cover The Distributions

While it is always good to see a solid dividend yield, we should also consider whether the payment is feasible.

AmeriServ Financial has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. Based on AmeriServ Financial's last earnings report, the payout ratio is at a decent 35%, meaning that the company is able to pay out its dividend with a bit of room to spare.

Over the next year, EPS could expand by 4.7% if recent trends continue. Assuming the dividend continues along recent trends, we think the future payout ratio could be 37% by next year, which is in a pretty sustainable range.

AmeriServ Financial Has A Solid Track Record

The company has an extended history of paying stable dividends. The annual payment during the last 10 years was $0.04 in 2016, and the most recent fiscal year payment was $0.12. This means that it has been growing its distributions at 12% per annum over that time. We can see that payments have shown some very nice upward momentum without faltering, which provides some reassurance that future payments will also be reliable.

AmeriServ Financial May Find It Hard To Grow The Dividend

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Earnings per share has been crawling upwards at 4.7% per year. While EPS growth is quite low, AmeriServ Financial has the option to increase the payout ratio to return more cash to shareholders.

AmeriServ Financial 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. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

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.