ServisFirst (SFBS) Rewards Investors With 7.1% Dividend Hike
ServisFirst Bancshares, Inc.’s SFBS board of directors has approved an increase in the company’s quarterly dividend to 30 cents per share, marking a 7.1% hike from the prior payout. The increased amount will be paid out on Jan 8, 2024, to shareholders on record as of Jan 2.
Based on the increased rate, the annual dividend is $1.2 per share, resulting in an annualized yield of 1.78%, considering the company’s closing price of $67.26 as of Dec 19, 2023. The yield is not only attractive to income investors but also represents a steady income stream.
The company has hiked its dividend every year since 2014. Before the latest hike, it had increased its dividend by 21.7% to 28 cents per share in December 2022.
ServisFirst’s ability to sustain the hiked dividend depends on balance sheet strength and the payout ratio. The company’s current payout ratio is 26.3%, lower than the industry’s average of 48.4%, thus indicating decent scope for a steady dividend increase.
Further, as of Sep 30, 2023, SFBS’s debt (including federal funds purchased and other borrowings) aggregated to $1.44 billion. Cash and cash equivalents totaled $2.07 billion as of the same date. The higher level of cash compared with the company’s obligations depicts a strong balance sheet position. Hence, its capital distributions seem sustainable even if the economic situation worsens.
Our Take
We believe that such continuous hikes highlight the company's operational strength and commitment toward rewarding shareholders handsomely. Investors are always on the lookout for companies with a track record of consistent and incremental dividend payments to bet their money on and solid dividend payouts are arguably the biggest enticement for such investors. Such moves also boost shareholders’ confidence in ServisFirst.
However, the deteriorating macroeconomic outlook remains a major near-term headwind, which is likely to hurt its financials to some extent.
Shares of SFBS have gained 51.7% over the past year compared with the industry’s 18.3% growth.
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SFBS carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Dividend Hikes by Other Finance Stocks
U.S. Bancorp USB declared a quarterly cash dividend of 49 cents per share, marking an increase of 2.1% from the prior quarter. The dividend will be paid out on Jan 16, 2024, to shareholders of record as of Dec 29, 2023.
Before the recent hike, USB raised its dividend in September 2022 by 4.3% to 48 cents per share. Also, the company has a five-year annualized dividend growth of 5.7%.
SEI Investments Company’s SEIC board of directors announced enhanced capital distribution plans, including a dividend hike and an increase in the share repurchase program. The company announced a semi-annual cash dividend of 46 cents per share, representing an increase of 7% from the prior payout. The dividend will be paid out on Jan 9, 2024, to shareholders on record as of Dec 28, 2023.
SEIC has a record of continuously raising dividends. Before this hike, the company announced a dividend raise in December 2022. The amount was increased from 40 cents per share to 43 cents per share.
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