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Independent Bank (INDB) Hikes Dividend: Is it Worth Buying?

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Independent Bank Corp. INDB has announced a dividend hike yet again. The company’s board of directors approved a quarterly cash dividend of 48 cents per share, marking a 4.3% increase from the prior payout. The dividend will be paid out on Apr 9 to shareholders of record as of Mar 29.

Considering last day’s closing price of $90.57, the company’s dividend yield currently stands at 2.1%. This yield is not only attractive to income investors but also represents a steady income stream. Also, it is impressive compared with the industry’s 1.83%.

Given its gradual cash-generation capability, Independent Bank is expected to sustain efficient capital deployments in the future, thus enhancing shareholder value. Prior to this hike, it raised its quarterly dividend by 5% in March 2020 to 46 cents per share.

While it seems that Independent Bank stock is an attractive investment option right now based on the dividend income, investors interested in this Zacks Rank #2 (Buy) stock can take a look at the company’s fundamentals and growth prospects to properly understand its rewards and risks.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Over the last three-five years, Independent Bank’s earnings witnessed growth of 12.9%, higher than the industry average of 10.1%.The upward momentum is expected to continue in the nearterm. The company’s earnings are projected to grow at a rate of 6.8% in2021.

Independent Bank’s shares have surged 80% over the past six months, underperforming the 99.2% rally of the industry it belongs to.

The company has been witnessing upward earnings estimate revisions of late, indicating that analysts are optimistic regarding its earnings growth potential. The Zacks Consensus Estimate has moved 10.1% and 4.9% upward for 2021 and 2022, respectively, over the past 60 days.

Independent Bank’s debt/equity ratio is 0.11 compared with the industry average of 0.26, reflecting a considerably lower debt burden.

However the company’s ROE of 7.22% compares unfavorably with the industry’s 8.56%, reflecting that it does not reinvest its cash as efficiently as its peers. So, one must consider this adverse factor before taking any investment decision.

Other Finance Companies Taking Similar Action

So far this year, several finance stocks have announced dividend hikes. Some of these companies include Horizon Bancorp HBNC, CBTX, Inc. CBTX and Fulton Financial Corporation FULT. Horizon Bancorp announced a quarterly cash dividend of 13 cents per share, representing an increase of 8.3% from the prior payout. CBTX raised its quarterly cash dividend by 30% to 13 cents per share. Fulton Financial announced a 7.7% increase in its cash dividend to 14 cents per share.

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Fulton Financial Corporation (FULT) : Free Stock Analysis Report

Horizon Bancorp IN (HBNC) : Free Stock Analysis Report

Independent Bank Corp. (INDB) : Free Stock Analysis Report

CBTX, Inc. (CBTX) : Free Stock Analysis Report

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