3.05% Dividend Yield and 10 Years of Stability—Is This Bank Stock the Steady Income Play You’ve Been Looking For?

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What if you could invest in a company that has consistently paid dividends for over a decade, and currently offers a solid 3.05% dividend yield? You’d probably want to take a closer look, right?

Meet Cathay General Bancorp (NASDAQ: CATY)

Financial Score: 87

Cathay General Bancorp has been paying dividends like clockwork for more than 10 years. Right now, they’re offering an annual dividend of $1.36 per share, broken down into quarterly payouts of $0.34 per share​. While the current dividend yield of 3.05% may not seem sky-high, it’s backed by a payout ratio of just 32.5%, which means the company is keeping plenty of its earnings to reinvest back into growth​.

Quick Heads-Up

To keep your portfolio in good shape, make sure you're regularly checking the financials of the companies you're invested in. Stronger companies deliver better results, so it’s important to track their quarterly and annual reports.

Top-tier companies usually have a Financial Score of 80+, with the best hitting 90+. If you notice that score dropping below 80, it might be time to rethink your position before things go south.

Steady Dividend Growth with Low Risk

Cathay General Bancorp has shown remarkable consistency in its dividend payments. Over the last decade, the company has steadily increased its dividend payments, reflecting solid financial health. What's particularly interesting for long-term dividend investors is that Cathay’s payout ratio of 32.5% is well below the industry average. This low payout ratio means Cathay is paying out less than a third of its earnings as dividends, leaving them with significant financial flexibility to weather economic downturns.

MaxDividends Tips

The Market Might Be Wild, But Your Dividends Aren’t The stock price might jump around, but those dividend checks? Rock steady. That’s the kind of consistency you can count on.

Financial Performance and Strong Earnings

In 2023, Cathay General Bancorp generated over $303 million in net earnings, which is more than sufficient to cover their dividends and still leave plenty for reinvestment​. This is what makes their dividends sustainable in the long run. And with a current price-to-earnings (P/E) ratio of 10.02, the stock is trading at a relatively attractive valuation, potentially offering value for income-seeking investors​.

Interesting Fact: A Bank Born from Immigrant Roots

Here’s an interesting tidbit about Cathay General Bancorp: it was originally founded in 1962 to serve the Chinese-American community in Los Angeles. Over the decades, it expanded far beyond its initial scope, becoming a full-service commercial bank with branches across the United States. This history gives Cathay deep roots in both the immigrant and business communities, helping it build strong, loyal customer relationships​.

Conclusion: Should Cathay General Bancorp Be on Your Radar?

If you’re looking for a steady, reliable dividend stock, Cathay General Bancorp might just fit the bill. With a 3.05% dividend yield, 10 years of consistent payouts, and a healthy payout ratio of 32.5%, it’s a solid choice for those who want stability with room for future growth​. Combine that with its Financial Score of 87, and Cathay is positioned as a long-term income play worth considering.

That said, always take the time to do your own due diligence before making any big investment decisions.

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