The board of Ally Financial Inc. (NYSE:ALLY) has announced that it will pay a dividend of $0.30 per share on the 15th of August. This makes the dividend yield 3.1%, which will augment investor returns quite nicely.

We’ve found 21 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free.

Ally Financial’s Earnings Will Easily Cover The Distributions

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable.

Having paid out dividends for 9 years, Ally Financial has a good history of paying out a part of its earnings to shareholders. Past distributions unfortunately do not guarantee future ones, and Ally Financial’s last earnings report actually showed that the company went over its net earnings in its total dividend distribution. This value is at an alarming sign that could mean that Ally Financial’s dividend at its current rate may no longer be sustainable for longer.

Analysts expect a massive rise in earnings per share in the next 3 years. They also expect the future payout ratio to be 24% over the same period, which would make us comfortable with the dividend’s sustainability, despite the levels currently being elevated.

NYSE:ALLY Historic Dividend July 23rd 2025

View our latest analysis for Ally Financial

Ally Financial Doesn’t Have A Long Payment History

It is great to see that Ally Financial has been paying a stable dividend for a number of years now, however we want to be a bit cautious about whether this will remain true through a full economic cycle. Since 2016, the dividend has gone from $0.32 total annually to $1.20. This works out to be a compound annual growth rate (CAGR) of approximately 16% 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 Potential Is Shaky

The company’s investors will be pleased to have been receiving dividend income for some time. Unfortunately things aren’t as good as they seem. Ally Financial’s EPS has fallen by approximately 15% per year during the past five years. This steep decline can indicate that the business is going through a tough time, which could constrain its ability to pay a larger dividend each year in the future. Over the next year, however, earnings are actually predicted to rise, but we would still be cautious until a track record of earnings growth can be built.

The Dividend Could Prove To Be Unreliable

In summary, while it’s good to see that the dividend hasn’t been cut, we are a bit cautious about Ally Financial’s payments, as there could be some issues with sustaining them into the future. The track record isn’t great, and the payments are a bit high to be considered sustainable. This company is not in the top tier of income providing stocks.