Orrstown Financial Services (NASDAQ:ORRF) Has Announced A Dividend Of $0.20
Orrstown Financial Services, Inc. (NASDAQ:ORRF) will pay a dividend of $0.20 on the 13th of February. This payment means that the dividend yield will be 2.8%, which is around the industry average.
While the dividend yield is important for income investors, it is also important to consider any large share price moves, as this will generally outweigh any gains from distributions. Investors will be pleased to see that Orrstown Financial Services' stock price has increased by 43% in the last 3 months, which is good for shareholders and can also explain a decrease in the dividend yield.
View our latest analysis for Orrstown Financial Services
Orrstown Financial Services' Earnings Will Easily Cover The Distributions
We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue.
Orrstown Financial Services has established itself as a dividend paying company, given its 9-year history of distributing earnings to shareholders. Using data from its latest earnings report, Orrstown Financial Services' payout ratio sits at 23%, an extremely comfortable number that shows that it can pay its dividend.
Looking forward, EPS is forecast to rise by 40.9% over the next 3 years. Analysts forecast the future payout ratio could be 20% over the same time horizon, which is a number we think the company can maintain.
Orrstown Financial Services Doesn't Have A Long Payment History
Even though the company has been paying a consistent dividend for a while, we would like to see a few more years before we feel comfortable relying on it. The dividend has gone from an annual total of $0.28 in 2015 to the most recent total annual payment of $0.80. This means that it has been growing its distributions at 12% per annum over that time. It is always nice to see strong dividend growth, but with such a short payment history we wouldn't be inclined to rely on it until a longer track record can be developed.
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. Orrstown Financial Services has seen EPS rising for the last five years, at 17% per annum. With a decent amount of growth and a low payout ratio, we think this bodes well for Orrstown Financial Services' prospects of growing its dividend payments in the future.
We Really Like Orrstown Financial Services' Dividend
Overall, we like to see the dividend staying consistent, and we think Orrstown Financial Services might even raise payments in the future. 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 in all, this checks a lot of the boxes we look for when choosing an income stock.
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. Taking the debate a bit further, we've identified 1 warning sign for Orrstown Financial Services that investors need to be conscious of moving forward. 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.
