The board of Community Financial System, Inc. (NYSE:CBU) has announced that it will be increasing its dividend by 2.2% on the 10th of October to $0.46, up from last year's comparable payment of $0.45. Based on this payment, the dividend yield for the company will be 3.1%, which is fairly typical for the industry.

While the dividend yield is important for income investors, it is also important to consider any large share price moves, as this will generally outweigh any gains from distributions. Investors will be pleased to see that Community Financial System's stock price has increased by 32% in the last 3 months, which is good for shareholders and can also explain a decrease in the dividend yield.

Check out our latest analysis for Community Financial System

Community Financial System's Dividend Forecasted To Be Well Covered By Earnings

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

Community Financial System 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 57%, which means that Community Financial System would be able to pay its last dividend without pressure on the balance sheet.

Looking forward, earnings per share is forecast to rise by 6.5% over the next year. If the dividend continues on this path, the future payout ratio could be 57% by next year, which we think can be pretty sustainable going forward.

Community Financial System Has A Solid Track Record

The company has an extended history of paying stable dividends. The dividend has gone from an annual total of $1.12 in 2014 to the most recent total annual payment of $1.80. This means that it has been growing its distributions at 4.9% per annum over that time. While the consistency in the dividend payments is impressive, we think the relatively slow rate of growth is less attractive.

Dividend Growth May Be Hard To Achieve

Investors could be attracted to the stock based on the quality of its payment history. However, initial appearances might be deceiving. Community Financial System hasn't seen much change in its earnings per share over the last five years.

Our Thoughts On Community Financial System's Dividend

Overall, it's great to see the dividend being raised and that it is still in a sustainable range. While the payments look sustainable for now, earnings have been shrinking so the dividend could come under pressure in the future. This looks like it could be a good dividend stock going forward, but we would note that the payout ratio has been at higher levels in the past so it could happen again.