Burke & Herbert Financial Services: Dividend Increase Despite Challenges

Burke & Herbert Financial Services plans to increase its dividend from the previous $0.53 to $0.55 on December 2. This represents an increase of 3.8% compared to the payout of the previous year and matches the industry average of 3.3%. For over a decade, Burke & Herbert has established itself as a reliable dividend payer. However, despite the consistent payout, the future of the dividend remains uncertain, as it was recently reported that the company is paying out dividends beyond its net earnings. This development is likely to concern shareholders, as the sustainability of the dividend payment is questionable. Nevertheless, analysts predict strong growth in earnings per share over the next three years. They anticipate a future payout ratio of 29%, which can be considered solid. Still, the trends of recent years are problematic: dividends grew only moderately by 1.4% annually, and earnings per share fell significantly at an annual rate of around 18%. In recent years, Burke & Herbert has increasingly raised capital by issuing new shares amounting to 101% of the outstanding shares. Such an approach can make dividend increases difficult, as new shares are continually issued. While earnings prospects for the coming year offer a glimmer of hope, the development remains to be seen in order to rely on income expectations in the long term.