Heritage Commerce's (NASDAQ:HTBK) Dividend Will Be $0.13
The board of Heritage Commerce Corp (NASDAQ:HTBK) has announced that it will pay a dividend on the 21st of November, with investors receiving $0.13 per share. The dividend yield will be 6.3% based on this payment which is still above the industry average.
View our latest analysis for Heritage Commerce
Heritage Commerce's Earnings Will Easily Cover The Distributions
We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable.
Having distributed dividends for at least 10 years, Heritage Commerce has a long history of paying out a part of its earnings to shareholders. Based on Heritage Commerce's last earnings report, the payout ratio is at a decent 44%, meaning that the company is able to pay out its dividend with a bit of room to spare.
EPS is set to fall by 16.1% over the next 3 years. Fortunately, analysts forecast the future payout ratio to be 51% over the same time horizon, which is in the range that makes us comfortable with the sustainability of the dividend.
Heritage Commerce Has A Solid Track Record
Even over a long history of paying dividends, the company's distributions have been remarkably stable. Since 2013, the annual payment back then was $0.12, compared to the most recent full-year payment of $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.
The Dividend Looks Likely To Grow
Investors could be attracted to the stock based on the quality of its payment history. It's encouraging to see that Heritage Commerce has been growing its earnings per share at 15% a year over the past five years. Shareholders are getting plenty of the earnings returned to them, which combined with strong growth makes this quite appealing.
Heritage Commerce Looks Like A Great Dividend Stock
Overall, we like to see the dividend staying consistent, and we think Heritage Commerce might even raise payments in the future. The distributions are easily covered by earnings, and there is plenty of cash being generated as well. 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 of these factors considered, we think this has solid potential as a dividend stock.
Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. 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 Heritage Commerce 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.
