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Luther Burbank (NASDAQ:LBC) Has Announced A Dividend Of $0.12

The board of Luther Burbank Corporation (NASDAQ:LBC) has announced that it will pay a dividend of $0.12 per share on the 14th of November. Including this payment, the dividend yield on the stock will be 3.9%, which is a modest boost for shareholders' returns.

View our latest analysis for Luther Burbank

Luther Burbank's Payment Expected To Have Solid Earnings Coverage

Even a low dividend yield can be attractive if it is sustained for years on end.

Luther Burbank has established itself as a dividend paying company, given its 5-year history of distributing earnings to shareholders. Taking data from its last earnings report, calculating for the company's payout ratio of 27%shows that Luther Burbank would be able to pay its last dividend without pressure on the balance sheet.

EPS is set to fall by 16.7% over the next 12 months. But assuming the dividend continues along recent trends, we believe the future payout ratio could be 32%, which we are pretty comfortable with and we think would be feasible on an earnings basis.

historic-dividend
historic-dividend

Luther Burbank Doesn't Have A Long Payment History

It is great to see that Luther Burbank 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 2017, the dividend has gone from $0.23 total annually to $0.48. This means that it has been growing its distributions at 16% 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's Growth Prospects Are Limited

Investors could be attracted to the stock based on the quality of its payment history. Earnings have grown at around 3.5% a year for the past five years, which isn't massive but still better than seeing them shrink. While EPS growth is quite low, Luther Burbank has the option to increase the payout ratio to return more cash to shareholders.

In Summary

In summary, we are pleased with the dividend remaining consistent, and we think there is a good chance of this continuing in the future. The dividend has been at reasonable levels historically, but that hasn't translated into a consistent payment. This looks like it could be a good dividend stock going forward, but we would note that the payout ratio has been at higher levels in the past so it could happen again.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For example, we've identified 2 warning signs for Luther Burbank (1 is a bit concerning!) that you should be aware of before investing. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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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