Heritage Commerce (NASDAQ:HTBK) Has Affirmed Its Dividend Of $0.13
Heritage Commerce Corp's (NASDAQ:HTBK) investors are due to receive a payment of $0.13 per share on 22nd of February. Based on this payment, the dividend yield on the company's stock will be 5.8%, which is an attractive boost to shareholder returns.
Check out our latest analysis for Heritage Commerce
Heritage Commerce's Payment Expected To Have Solid Earnings Coverage
A big dividend yield for a few years doesn't mean much if it can't be sustained.
Heritage Commerce has a long history of paying out dividends, with its current track record at a minimum of 10 years. Based on Heritage Commerce's last earnings report, the payout ratio is at a decent 49%, meaning that the company is able to pay out its dividend with a bit of room to spare.
EPS is set to fall by 28.4% over the next 3 years. Despite that, analysts estimate the future payout ratio could be 60% over the same time period, which is in a pretty comfortable range.
Heritage Commerce Has A Solid Track Record
The company has an extended history of paying stable dividends. Since 2014, the dividend has gone from $0.12 total annually to $0.52. This implies that the company grew its distributions at a yearly rate of about 16% over that duration. Rapidly growing dividends for a long time is a very valuable feature for an income stock.
Dividend Growth May Be Hard To Achieve
Investors could be attracted to the stock based on the quality of its payment history. Earnings have grown at around 4.3% a year for the past five years, which isn't massive but still better than seeing them shrink. Heritage Commerce is struggling to find viable investments, so it is returning more to shareholders. While this isn't necessarily a negative, it definitely signals that dividend growth could be constrained in the future unless earnings start to pick up again.
In Summary
Overall, it's nice to see a consistent dividend payment, but we think that longer term, the current level of payment might be unsustainable. The low payout ratio is a redeeming feature, but generally we are not too happy with the payments Heritage Commerce has been making. This company is not in the top tier of income providing stocks.
Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. As an example, we've identified 1 warning sign for Heritage Commerce that you should be aware of before investing. Is Heritage Commerce 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.
