Community Trust Bancorp (NASDAQ:CTBI) Is Increasing Its Dividend To $0.46
Community Trust Bancorp, Inc. (NASDAQ:CTBI) will increase its dividend on the 1st of October to $0.46, which is 4.5% higher than last year's payment from the same period of $0.44. This makes the dividend yield 4.5%, which is above the industry average.
See our latest analysis for Community Trust Bancorp
Community Trust Bancorp's Payment Expected To Have Solid Earnings Coverage
If the payments aren't sustainable, a high yield for a few years won't matter that much.
Community Trust Bancorp has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. Past distributions do not necessarily guarantee future ones, but Community Trust Bancorp's payout ratio of 39% is a good sign as this means that earnings decently cover dividends.
EPS is set to fall by 10.7% over the next 12 months. But if the dividend continues along recent trends, we estimate the future payout ratio could be 46%, which we would consider to be quite comfortable looking forward, with most of the company's earnings left over to grow the business in the future.
Community Trust Bancorp Has A Solid Track Record
Even over a long history of paying dividends, the company's distributions have been remarkably stable. Since 2013, the dividend has gone from $1.15 total annually to $1.76. This implies that the company grew its distributions at a yearly rate of about 4.4% over that duration. 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 Has Growth Potential
Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Community Trust Bancorp has impressed us by growing EPS at 7.1% per year over the past five years. Community Trust Bancorp definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.
Community Trust Bancorp Looks Like A Great Dividend Stock
Overall, a dividend increase is always good, and we think that Community Trust Bancorp is a strong income stock thanks to its track record and growing earnings. The earnings easily cover the company's distributions, and the company is generating plenty of cash. If earnings do fall over the next 12 months, the dividend could be buffeted a little bit, but we don't think it should cause too much of a problem in the long term. All in all, this checks a lot of the boxes we look for when choosing an income stock.
Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. As an example, we've identified 1 warning sign for Community Trust Bancorp that you should be aware of before investing. 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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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.
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