Old Second Bancorp (NASDAQ:OSBC) Has Announced A Dividend Of $0.05
Old Second Bancorp, Inc. (NASDAQ:OSBC) will pay a dividend of $0.05 on the 6th of February. This means the annual payment will be 1.3% of the current stock price, which is lower than the industry average.
Check out our latest analysis for Old Second Bancorp
Old Second Bancorp's Dividend Forecasted To Be Well Covered By Earnings
If it is predictable over a long period, even low dividend yields can be attractive.
Old Second Bancorp has a good history of paying out dividends, with its current track record at 7 years. Using data from its latest earnings report, Old Second Bancorp's payout ratio sits at 24%, an extremely comfortable number that shows that it can pay its dividend.
Looking forward, EPS is forecast to rise by 69.3% over the next 3 years. Analysts estimate the future payout ratio will be 11% over the same time period, which is in the range that makes us comfortable with the sustainability of the dividend.
Old Second Bancorp Doesn't Have A Long Payment History
It is great to see that Old Second Bancorp 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 2016, the dividend has gone from $0.04 total annually to $0.20. This means that it has been growing its distributions at 26% per annum over that time. The dividend has been growing rapidly, however with such a short payment history we can't know for sure if payment can continue to grow over the long term, so caution may be warranted.
Dividend Growth May Be Hard To Achieve
Investors could be attracted to the stock based on the quality of its payment history. Although it's important to note that Old Second Bancorp's earnings per share has basically not grown from where it was five years ago, which could erode the purchasing power of the dividend over time. While growth may be thin on the ground, Old Second Bancorp could always pay out a higher proportion of earnings to increase shareholder returns.
In Summary
Overall, we think Old Second Bancorp is a solid choice as a dividend stock, even though the dividend wasn't raised this year. The dividend has been at reasonable levels historically, but that hasn't translated into a consistent payment. The payment isn't stellar, but it could make a decent addition to a dividend portfolio.
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. For instance, we've picked out 1 warning sign for Old Second Bancorp that investors should take into consideration. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.
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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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