Seacoast Banking Corporation of Florida (NASDAQ:SBCF) Will Pay A Dividend Of $0.18
Seacoast Banking Corporation of Florida (NASDAQ:SBCF) will pay a dividend of $0.18 on the 29th of September. Based on this payment, the dividend yield will be 3.0%, which is fairly typical for the industry.
View our latest analysis for Seacoast Banking Corporation of Florida
Seacoast Banking Corporation of Florida's Dividend Forecasted To Be Well Covered By Earnings
While it is always good to see a solid dividend yield, we should also consider whether the payment is feasible.
Having paid out dividends for only 2 years, Seacoast Banking Corporation of Florida does not have much of a history being a dividend paying company. Diving into the company's earnings report, the payout ratio is set at 53%, which is a decent ratio of dividend payout to earnings, and may sustain future dividends if the company stays at its current trend.
Over the next year, EPS is forecast to expand by 22.1%. If the dividend continues on this path, the future payout ratio could be 50% by next year, which we think can be pretty sustainable going forward.
Seacoast Banking Corporation of Florida Is Still Building Its Track Record
The dividend has been pretty stable looking back, but the company hasn't been paying one for very long. This makes it tough to judge how it would fare through a full economic cycle. Since 2021, the annual payment back then was $0.52, compared to the most recent full-year payment of $0.72. This means that it has been growing its distributions at 18% 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.
Seacoast Banking Corporation of Florida May Find It Hard To Grow The Dividend
Investors could be attracted to the stock based on the quality of its payment history. Let's not jump to conclusions as things might not be as good as they appear on the surface. In the last five years, Seacoast Banking Corporation of Florida's earnings per share has shrunk at approximately 3.5% per annum. If earnings continue declining, the company may have to make the difficult choice of reducing the dividend or even stopping it completely - the opposite of dividend growth. Earnings are forecast to grow over the next 12 months and if that happens we could still be a little bit cautious until it becomes a pattern.
An additional note is that the company has been raising capital by issuing stock equal to 39% of shares outstanding in the last 12 months. Trying to grow the dividend when issuing new shares reminds us of the ancient Greek tale of Sisyphus - perpetually pushing a boulder uphill. Companies that consistently issue new shares are often suboptimal from a dividend perspective.
In Summary
Overall, it's nice to see a consistent dividend payment, but we think that longer term, the current level of payment might be unsustainable. The company hasn't been paying a very consistent dividend over time, despite only paying out a small portion of earnings. We would probably look elsewhere for an income investment.
Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. As an example, we've identified 4 warning signs for Seacoast Banking Corporation of Florida that you should be aware of before investing. 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.
