Horizon Bancorp's (NASDAQ:HBNC) Shareholders Will Receive A Bigger Dividend Than Last Year
Horizon Bancorp, Inc.'s (NASDAQ:HBNC) dividend will be increasing from last year's payment of the same period to $0.16 on 21st of April. This takes the dividend yield to 5.8%, which shareholders will be pleased with.
See our latest analysis for Horizon Bancorp
Horizon Bancorp's Earnings Will Easily Cover The Distributions
Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained.
Horizon Bancorp has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. Based on Horizon Bancorp's last earnings report, the payout ratio is at a decent 29%, meaning that the company is able to pay out its dividend with a bit of room to spare.
Over the next 3 years, EPS is forecast to fall by 25.9%. Despite that, analysts estimate the future payout ratio could be 42% over the same time period, which is in a pretty comfortable range.
Horizon Bancorp Has A Solid Track Record
The company has a sustained record of paying dividends with very little fluctuation. Since 2013, the annual payment back then was $0.154, compared to the most recent full-year payment of $0.64. This works out to be a compound annual growth rate (CAGR) of approximately 15% a year over that time. So, dividends have been growing pretty quickly, and even more impressively, they haven't experienced any notable falls during this period.
The Dividend Looks Likely To Grow
Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Horizon Bancorp has seen EPS rising for the last five years, at 17% per annum. Horizon Bancorp definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.
We Really Like Horizon Bancorp's Dividend
In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. 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.
Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. As an example, we've identified 1 warning sign for Horizon Bancorp 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.
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.
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