United Bankshares, Inc.'s (NASDAQ:UBSI) investors are due to receive a payment of $0.37 per share on 2nd of January. Based on this payment, the dividend yield will be 3.5%, which is fairly typical for the industry.

See our latest analysis for United Bankshares

United Bankshares' Earnings Will Easily Cover The Distributions

We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue.

Having distributed dividends for at least 10 years, United Bankshares has a long history of paying out a part of its earnings to shareholders. Past distributions do not necessarily guarantee future ones, but United Bankshares' payout ratio of 56% is a good sign as this means that earnings decently cover dividends.

Over the next 3 years, EPS is forecast to expand by 16.6%. Analysts forecast the future payout ratio could be 51% over the same time horizon, which is a number we think the company can maintain.

United Bankshares Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2014, the annual payment back then was $1.28, compared to the most recent full-year payment of $1.48. This means that it has been growing its distributions at 1.5% per annum over that time. Slow and steady dividend growth might not sound that exciting, but dividends have been stable for ten years, which we think makes this a fairly attractive offer.

The Dividend's Growth Prospects Are Limited

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Unfortunately, United Bankshares' earnings per share has been essentially flat over the past five years, which means the dividend may not be increased each year. United Bankshares is struggling to find viable investments, so it is returning more to shareholders. This isn't bad in itself, but unless earnings growth pick up we wouldn't expect dividends to grow either.

We Really Like United Bankshares' Dividend

Overall, we think that this is a great income investment, and we think that maintaining the dividend this year may have been a conservative choice. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All in all, this checks a lot of the boxes we look for when choosing an income stock.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Companies that are growing earnings tend to be the best dividend stocks over the long term. See what the 5 analysts we track are forecasting for United Bankshares for free with public analyst estimates for the company. Is United Bankshares not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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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.