ServisFirst Bancshares (NYSE:SFBS) Will Pay A Larger Dividend Than Last Year At $0.30
The board of ServisFirst Bancshares, Inc. (NYSE:SFBS) has announced that it will be increasing its dividend by 7.1% on the 8th of January to $0.30, up from last year's comparable payment of $0.28. Despite this raise, the dividend yield of 1.7% is only a modest boost to shareholder returns.
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 ServisFirst Bancshares' stock price has increased by 37% 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 ServisFirst Bancshares
ServisFirst Bancshares' Earnings Will Easily Cover The Distributions
If it is predictable over a long period, even low dividend yields can be attractive.
ServisFirst Bancshares has a good history of paying out dividends, with its current track record at 9 years. Based on ServisFirst Bancshares' last earnings report, the payout ratio is at a decent 26%, meaning that the company is able to pay out its dividend with a bit of room to spare.
Looking forward, earnings per share is forecast to fall by 12.0% over the next 3 years. However, as estimated by analysts, the future payout ratio could be 31% over the same time period, which we think the company can easily maintain.
ServisFirst Bancshares Doesn't Have A Long Payment History
ServisFirst Bancshares' 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. Since 2014, the dividend has gone from $0.10 total annually to $1.12. This works out to be a compound annual growth rate (CAGR) of approximately 31% a year over that time. ServisFirst Bancshares 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
Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. It's encouraging to see that ServisFirst Bancshares has been growing its earnings per share at 13% a year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for ServisFirst Bancshares' prospects of growing its dividend payments in the future.
ServisFirst Bancshares Looks Like A Great Dividend Stock
Overall, a dividend increase is always good, and we think that ServisFirst Bancshares is a strong income stock thanks to its track record and growing earnings. The company is generating plenty of cash, and the earnings also quite easily cover the distributions. We should point out that the earnings are expected to fall over the next 12 months, which won't be a problem if this doesn't become a trend, but could cause some turbulence in the next year. 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. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Case in point: We've spotted 3 warning signs for ServisFirst Bancshares (of which 1 is significant!) you should know about. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.
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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.
