Important news for shareholders and potential investors in Horizon Bancorp (NASDAQ:HBNC): The dividend payment of $0.15 per share will be distributed into shareholder on 20 April 2018, and the stock will begin trading ex-dividend at an earlier date, 05 April 2018. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I take a deeper dive into Horizon Bancorp’s latest financial data to analyse its dividend attributes. View our latest analysis for Horizon Bancorp
How I analyze a dividend stock
When researching a dividend stock, I always follow the following screening criteria:
- Is it the top 25% annual dividend yield payer?
- Has it consistently paid a stable dividend without missing a payment or drastically cutting payout?
- Has dividend per share amount increased over the past?
- Is it able to pay the current rate of dividends from its earnings?
- Will the company be able to keep paying dividend based on the future earnings growth?
How well does Horizon Bancorp fit our criteria?
The company currently pays out 34.78% of its earnings as a dividend, according to its trailing twelve-month data, meaning the dividend is sufficiently covered by earnings. However, going forward, analysts expect HBNC’s payout to fall to 26.87% of its earnings, which leads to a dividend yield of around 2.01%. However, EPS should increase to $2.17, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment. Reliablity is an important factor for dividend stocks, particularly for income investors who want a strong track record of payment and a positive outlook for future payout. HBNC has increased its DPS from $0.18 to $0.6 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. Compared to its peers, Horizon Bancorp produces a yield of 2.00%, which is on the low-side for Banks stocks.
With these dividend metrics in mind, I definitely rank Horizon Bancorp 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, I recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. I’ve put together three relevant aspects you should further research:
- Future Outlook: What are well-informed industry analysts predicting for HBNC’s future growth? Take a look at our free research report of analyst consensus for HBNC’s outlook.
- Valuation: What is HBNC 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 HBNC 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 pass 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.