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ServisFirst (SFBS) Hikes Dividend by 14%: Is it Worth a Look?

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Zacks Equity Research
·3 min read
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On Monday, ServisFirst Bancshares, Inc. SFBS hiked its quarterly common stock dividend by about 14% from the prior-quarter payout to 20 cents per share. The new dividend will be paid on Jan 8, 2021, to shareholders on record as of Jan 1, 2021.

Since 2014, the company has raised its dividend every year. The dividend was last hiked in December 2019 by 16% to 17.50 cents per share. This reflects the company’s commitment to return value to shareholders with its strong cash-generation capabilities.

Such capital-deployment activities are part of ServisFirst Bancshares’ long-term strategy to boost shareholder value. It also provides banking services to individual and corporate customers in the United States, while sustaining financial stability and flexibility.

Considering Monday’s closing price of $39.92 per share, the dividend yield is currently valued at 2%.

Investors interested in this Zacks Rank #3 (Hold) stock can have a look at the company’s fundamentals and growth opportunities. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

ServisFirst Bancshares witnessed earnings growth of 21.9% in the last three to five years. This earnings momentum is likely to continue in the near term as indicated by the company’s projected earnings per share (EPS) growth rate (F1/F0) of 9.7% against the industry average of 13.2% decline.

Also, its organic growth seems impressive. ServisFirst Bancshares’ revenues witnessed a CAGR of 20.9% over the last five years (2015-2019). Driven by efforts to grow business, the company’s top line is expected to be up 16.8% for 2020 and 2.3% for 2021.

ServisFirst Bancshares’ debt/equity ratio is 0.07 compared with the industry average of 0.51. The relatively strong financial health of the company will help it perform better than its peers under a dynamic business environment.

Further, its return on equity (ROE) supports the company’s growth potential. Its ROE currently stands at 17.79%, higher than the industry average of 7.3%. This shows that it is more efficient than peers in utilizing shareholders’ funds.

However, the coronavirus outbreak-related slowdown has been hurting the bank’s profitability. Also, margin pressure is likely to persist in the near term, mainly due to the continued low interest rate environment.

Shares of ServisFirst Bancshares have gained 13.4% year to date compared with the 23.3% growth recorded by the industry.

 

Some other finance stocks which have raised their dividends during the current quarter are Capital City Bank Group, Inc. CCBG, Glacier Bancorp, Inc. GBCI and First Financial Corporation THFF. Capital City Bank raised its quarterly dividend by 7.1%, while Glacier Bancorp increased it 3.4%. Also, First Financial has announced a 1.9% hike in common stock dividend.

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Glacier Bancorp, Inc. (GBCI) : Free Stock Analysis Report
 
Capital City Bank Group (CCBG) : Free Stock Analysis Report
 
ServisFirst Bancshares, Inc. (SFBS) : Free Stock Analysis Report
 
First Financial Corporation Indiana (THFF) : Free Stock Analysis Report
 
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