- Oops!Something went wrong.Please try again later.
The board of Origin Bancorp, Inc. (NASDAQ:OBNK) has announced that it will be increasing its dividend on the 31st of August to US$0.13. Despite this raise, the dividend yield of 1.1% is only a modest boost to shareholder returns.
Origin Bancorp's Earnings Easily Cover the Distributions
Even a low dividend yield can be attractive if it is sustained for years on end. Before making this announcement, Origin Bancorp was easily earning enough to cover the dividend. This means that most of what the business earns is being used to help it grow.
Over the next year, EPS is forecast to expand by 3.7%. If the dividend continues on this path, the payout ratio could be 17% by next year, which we think can be pretty sustainable going forward.
Origin Bancorp Doesn't Have A Long Payment History
The dividend hasn't seen any major cuts in the past, but the company has only been paying a dividend for 3 years, which isn't that long in the grand scheme of things. Since 2018, the first annual payment was US$0.13, compared to the most recent full-year payment of US$0.52. This implies that the company grew its distributions at a yearly rate of about 59% over that duration. Origin 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. Origin Bancorp has seen EPS rising for the last five years, at 51% per annum. Earnings have been growing rapidly, and with a low payout ratio we think that the company could turn out to be a great dividend stock.
Origin Bancorp Looks Like A Great Dividend Stock
Overall, a dividend increase is always good, and we think that Origin Bancorp is a strong income stock thanks to its track record and growing earnings. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. All of these factors considered, we think this has solid potential as a dividend stock.
Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. However, there are other things to consider for investors when analysing stock performance. For example, we've picked out 1 warning sign for Origin Bancorp that investors should know about before committing capital to this stock. If you are a dividend investor, you might also want to look at our curated list of high performing dividend stock.
This article by Simply Wall St is general in nature. 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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.