Should Home Bancshares, Inc. (Conway, AR) (NASDAQ:HOMB) Be Part Of Your Dividend Portfolio?
There is a lot to be liked about Home Bancshares, Inc. (Conway, AR) (NASDAQ:HOMB) as an income stock. It has paid dividends over the past 10 years. The company is currently worth US$3.1b, and now yields roughly 2.6%. Should it have a place in your portfolio? Let’s take a look at Home Bancshares (Conway AR) in more detail.
View our latest analysis for Home Bancshares (Conway AR)
5 questions I ask before picking a dividend stock
If you are a dividend investor, you should always assess these five key metrics:
Is it the top 25% annual dividend yield payer?
Does it consistently pay out dividends without missing a payment of significantly cutting payout?
Has dividend per share risen in the past couple of years?
Does earnings amply cover its dividend payments?
Based on future earnings growth, will it be able to continue to payout dividend at the current rate?
Does Home Bancshares (Conway AR) pass our checks?
Home Bancshares (Conway AR) has a trailing twelve-month payout ratio of 27%, meaning the dividend is sufficiently covered by earnings. Going forward, analysts expect HOMB’s payout to remain around the same level at 25% of its earnings. Assuming a constant share price, this equates to a dividend yield of around 2.9%. Furthermore, EPS should increase to $1.78.
When thinking about whether a dividend is sustainable, another factor to consider is the cash flow. A business with strong cash flow can sustain a higher divided payout ratio than a company with weak cash flow.
If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. HOMB has increased its DPS from $0.054 to $0.48 in the past 10 years. It has also been paying out dividend consistently during this time, as you’d expect for a company increasing its dividend levels. These are all positive signs of a great, reliable dividend stock.
Relative to peers, Home Bancshares (Conway AR) produces a yield of 2.6%, which is on the low-side for Banks stocks.
Next Steps:
With these dividend metrics in mind, I definitely rank Home Bancshares (Conway AR) as a strong income stock, and is worth further research for anyone who considers dividends an important part of their portfolio strategy. Given that this is purely a dividend analysis, you should always research extensively before deciding whether or not a stock is an appropriate investment for you. I always recommend analysing the company’s fundamentals and underlying business before making an investment decision. Below, I’ve compiled three fundamental aspects you should further research:
Future Outlook: What are well-informed industry analysts predicting for HOMB’s future growth? Take a look at our free research report of analyst consensus for HOMB’s outlook.
Valuation: What is HOMB worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether HOMB is currently mispriced by the market.
Other Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
