Atlantic Union Bankshares Corporation (NYSE:AUB) will increase its dividend on the 22nd of November to $0.34, which is 6.3% higher than last year's payment from the same period of $0.32. This takes the annual payment to 3.5% of the current stock price, which is about average for the industry.

View our latest analysis for Atlantic Union Bankshares

Atlantic Union Bankshares' Dividend Forecasted To Be Well Covered By Earnings

Solid dividend yields are great, but they only really help us if the payment is sustainable.

Atlantic Union Bankshares has a long history of paying out dividends, with its current track record at a minimum of 10 years. Taking data from its last earnings report, calculating for the company's payout ratio shows 54%, which means that Atlantic Union Bankshares would be able to pay its last dividend without pressure on the balance sheet.

Looking forward, EPS is forecast to rise by 78.2% over the next 3 years. The future payout ratio could be 36% over that time period, according to analyst estimates, which is a good look for the future of the dividend.

Atlantic Union Bankshares Has A Solid Track Record

The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. The annual payment during the last 10 years was $0.56 in 2014, and the most recent fiscal year payment was $1.28. This works out to be a compound annual growth rate (CAGR) of approximately 8.6% a year over that time. Dividends have grown at a reasonable rate over this period, and without any major cuts in the payment over time, we think this is an attractive combination as it provides a nice boost to shareholder returns.

Dividend Growth May Be Hard To Achieve

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. However, things aren't all that rosy. In the last five years, Atlantic Union Bankshares' earnings per share has shrunk at approximately 3.7% per annum. If earnings continue declining, the company may have to make the difficult choice of reducing the dividend or even stopping it completely - the opposite of dividend growth. Earnings are forecast to grow over the next 12 months and if that happens we could still be a little bit cautious until it becomes a pattern.

We should note that Atlantic Union Bankshares has issued stock equal to 33% of shares outstanding. Regularly doing this can be detrimental - it's hard to grow dividends per share when new shares are regularly being created.