Old Second Bancorp (NASDAQ:OSBC) Is Due To Pay A Dividend Of $0.05
The board of Old Second Bancorp, Inc. (NASDAQ:OSBC) has announced that it will pay a dividend on the 5th of February, with investors receiving $0.05 per share. The dividend yield is 1.3% based on this payment, which is a little bit low compared to the other companies in the industry.
View our latest analysis for Old Second Bancorp
Old Second Bancorp's Earnings Will Easily Cover The Distributions
While yield is important, another factor to consider about a company's dividend is whether the current payout levels are feasible.
Old Second Bancorp has a good history of paying out dividends, with its current track record at 8 years. While past data isn't a guarantee for the future, Old Second Bancorp's latest earnings report puts its payout ratio at 9.2%, showing that the company can pay out its dividends comfortably.
Looking forward, earnings per share is forecast to fall by 24.9% over the next 3 years. However, as estimated by analysts, the future payout ratio could be 11% over the same time period, which we think the company can easily maintain.
Old Second Bancorp Doesn't Have A Long Payment History
Old Second Bancorp's dividend has been pretty stable for a little while now, but we will continue to be cautious until it has been demonstrated for a few more years. The dividend has gone from an annual total of $0.04 in 2016 to the most recent total annual payment of $0.20. This works out to be a compound annual growth rate (CAGR) of approximately 22% a year over that time. Old Second Bancorp has been growing its dividend quite rapidly, which is exciting. However, the short payment history makes us question whether this performance will persist across a full market cycle.
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. We are encouraged to see that Old Second Bancorp has grown earnings per share at 23% per year over the past five years. Earnings per share is growing at a solid clip, and the payout ratio is low which we think is an ideal combination in a dividend stock as the company can quite easily raise the dividend in the future.
Old Second Bancorp Looks Like A Great Dividend Stock
In summary, it is good to see that the dividend is staying consistent, and we don't think there is any reason to suspect this might change over the medium term. The company is generating plenty of cash, and the earnings also quite easily cover the distributions. If earnings do fall over the next 12 months, the dividend could be buffeted a little bit, but we don't think it should cause too much of a problem in the long term. 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. However, there are other things to consider for investors when analysing stock performance. Taking the debate a bit further, we've identified 1 warning sign for Old Second Bancorp that investors need to be conscious of moving forward. 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.
