Civista Bancshares, Inc.'s (NASDAQ:CIVB) dividend will be increasing to US$0.14 on 2nd of August. This makes the dividend yield about the same as the industry average at 2.1%.
Civista Bancshares' Earnings Easily Cover the Distributions
We like a dividend to be consistent over the long term, so checking whether it is sustainable is important. Before making this announcement, Civista Bancshares was easily earning enough to cover the dividend. As a result, a large proportion of what it earned was being reinvested back into the business.
Looking forward, earnings per share is forecast to rise by 2.0% over the next year. Assuming the dividend continues along recent trends, we think the payout ratio could be 25% by next year, which is in a pretty sustainable range.
Civista Bancshares Has A Solid Track Record
The company has an extended history of paying stable dividends. Since 2011, the first annual payment was US$0.12, compared to the most recent full-year payment of US$0.56. This implies that the company grew its distributions at a yearly rate of about 17% over that duration. It is good to see that there has been strong dividend growth, and that there haven't been any cuts for a long time.
We Could See Civista Bancshares' Dividend Growing
The company's investors will be pleased to have been receiving dividend income for some time. We are encouraged to see that Civista Bancshares has grown earnings per share at 6.3% per year over the past five years. Civista Bancshares definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.
Civista Bancshares Looks Like A Great Dividend Stock
Overall, a dividend increase is always good, and we think that Civista Bancshares is a strong income stock thanks to its track record and growing earnings. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All of these factors considered, we think this has solid potential as a dividend stock.
It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Companies that are growing earnings tend to be the best dividend stocks over the long term. See what the 6 analysts we track are forecasting for Civista Bancshares for free with public analyst estimates for the company. Looking for more high-yielding dividend ideas? Try our curated list of strong dividend payers.
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