Horizon Bancorp (NASDAQ:HBNC) Has Announced That It Will Be Increasing Its Dividend To $0.16
Horizon Bancorp, Inc. (NASDAQ:HBNC) has announced that it will be increasing its dividend from last year's comparable payment on the 20th of January to $0.16. This will take the dividend yield to an attractive 4.2%, providing a nice boost to shareholder returns.
See our latest analysis for Horizon Bancorp
Horizon 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.
Horizon Bancorp has a long history of paying out dividends, with its current track record at a minimum of 10 years. Past distributions do not necessarily guarantee future ones, but Horizon Bancorp's payout ratio of 29% is a good sign as this means that earnings decently cover dividends.
Looking forward, earnings per share is forecast to fall by 9.8% over the next 3 years. Despite that, analysts estimate the future payout ratio could be 36% over the same time period, which is in a pretty comfortable range.
Horizon Bancorp Has A Solid Track Record
The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. The dividend has gone from an annual total of $0.142 in 2012 to the most recent total annual payment of $0.64. This implies that the company grew its distributions at a yearly rate of about 16% over that duration. It is good to see that there has been strong dividend growth, and that there haven't been any cuts for a long time.
The Dividend Looks Likely To Grow
Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. It's encouraging to see that Horizon Bancorp has been growing its earnings per share at 18% a year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for Horizon Bancorp's prospects of growing its dividend payments in the future.
We Really Like Horizon Bancorp's Dividend
Overall, a dividend increase is always good, and we think that Horizon Bancorp is a strong income stock thanks to its track record and growing earnings. The distributions are easily covered by earnings, and there is plenty of cash being generated as well. We should point out that the earnings are expected to fall over the next 12 months, which won't be a problem if this doesn't become a trend, but could cause some turbulence in the next year. 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. Taking the debate a bit further, we've identified 1 warning sign for Horizon Bancorp that investors need to be conscious of moving forward. Is Horizon Bancorp not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.
Join A Paid User Research Session
You’ll receive a US$30 Amazon Gift card for 1 hour of your time while helping us build better investing tools for the individual investors like yourself. Sign up here
