Amerant Bancorp Inc. (NYSE:AMTB) will pay a dividend of $0.09 on the 29th of November. Including this payment, the dividend yield on the stock will be 1.7%, which is a modest boost for shareholders' returns.

Check out our latest analysis for Amerant Bancorp

Amerant Bancorp's Payment Expected To Have Solid Earnings Coverage

If it is predictable over a long period, even low dividend yields can be attractive.

Amerant Bancorp has a short history of paying out dividends, with its current track record at only 3 years. This is worrying for investors as it points to Amerant Bancorp's dividends being unsustainable in the long term.

According to analysts, EPS should be several times higher in the next 3 years. They also estimate that the future payout ratio will be 15% in the same time horizon, so there isn't too much pressure on the dividend.

Amerant Bancorp Is Still Building Its Track Record

The dividend has been pretty stable looking back, but the company hasn't been paying one for very long. This makes it tough to judge how it would fare through a full economic cycle. Since 2021, the dividend has gone from $0.24 total annually to $0.36. This works out to be a compound annual growth rate (CAGR) of approximately 14% a year over that time. The dividend has been growing rapidly, however with such a short payment history we can't know for sure if payment can continue to grow over the long term, so caution may be warranted.

Dividend Growth May Be Hard To Achieve

Investors could be attracted to the stock based on the quality of its payment history. Although it's important to note that Amerant Bancorp's earnings per share has basically not grown from where it was five years ago, which could erode the purchasing power of the dividend over time. Amerant Bancorp isn't actually turning a profit, which makes it much harder for us to see how they can grow dividends.

We should note that Amerant Bancorp has issued stock equal to 26% of shares outstanding. Regularly doing this can be detrimental - it's hard to grow dividends per share when new shares are regularly being created.

Our Thoughts On Amerant Bancorp's Dividend

Overall, it's nice to see a consistent dividend payment, but we think that longer term, the current level of payment might be unsustainable. The track record isn't great, and the payments are a bit high to be considered sustainable. Overall, we don't think this company has the makings of a good income stock.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Taking the debate a bit further, we've identified 2 warning signs for Amerant Bancorp that investors need to be conscious of moving forward. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

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