HomeTrust Bancshares' (NASDAQ:HTBI) Shareholders Will Receive A Bigger Dividend Than Last Year
HomeTrust Bancshares, Inc. (NASDAQ:HTBI) has announced that it will be increasing its dividend from last year's comparable payment on the 30th of November to $0.11. Even though the dividend went up, the yield is still quite low at only 2.1%.
View our latest analysis for HomeTrust Bancshares
HomeTrust Bancshares' Payment Expected To Have Solid Earnings Coverage
Even a low dividend yield can be attractive if it is sustained for years on end.
Having paid out dividends for 5 years, HomeTrust Bancshares has a good history of paying out a part of its earnings to shareholders. While past records don't necessarily translate into future results, the company's payout ratio of 13% also shows that HomeTrust Bancshares is able to comfortably pay dividends.
Looking forward, earnings per share is forecast to fall by 7.7% over the next 3 years. Fortunately, analysts forecast the future payout ratio to be 15% over the same time horizon, which is in the range that makes us comfortable with the sustainability of the dividend.
HomeTrust Bancshares Doesn't Have A Long Payment History
It is great to see that HomeTrust Bancshares has been paying a stable dividend for a number of years now, however we want to be a bit cautious about whether this will remain true through a full economic cycle. Since 2018, the dividend has gone from $0.24 total annually to $0.44. This means that it has been growing its distributions at 13% per annum over that time. We're not overly excited about the relatively short history of dividend payments, however the dividend is growing at a nice rate and we might take a closer look.
The Dividend Looks Likely To Grow
Investors could be attracted to the stock based on the quality of its payment history. We are encouraged to see that HomeTrust Bancshares has grown earnings per share at 38% per year over the past five years. Rapid earnings growth and a low payout ratio suggest this company has been effectively reinvesting in its business. Should that continue, this company could have a bright future.
An additional note is that the company has been raising capital by issuing stock equal to 11% of shares outstanding in the last 12 months. Regularly doing this can be detrimental - it's hard to grow dividends per share when new shares are regularly being created.
HomeTrust Bancshares Looks Like A Great Dividend Stock
Overall, a dividend increase is always good, and we think that HomeTrust Bancshares is a strong income stock thanks to its track record and growing earnings. The company is generating plenty of cash, and the earnings also quite easily cover the distributions. However, it is worth noting that the earnings are expected to fall over the next year, which may not change the long term outlook, but could affect the dividend payment in the next 12 months. All in all, this checks a lot of the boxes we look for when choosing an income 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. Case in point: We've spotted 3 warning signs for HomeTrust Bancshares (of which 1 is a bit unpleasant!) you should know about. Is HomeTrust Bancshares 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.
