South Plains Financial Inc's Dividend Analysis
Understanding SPFI's Dividend Dynamics
South Plains Financial Inc (NASDAQ:SPFI) recently announced a dividend of $0.13 per share, payable on 2024-02-12, with the ex-dividend date set for 2024-01-26. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into South Plains Financial Inc's dividend performance and assess its sustainability.
What Does South Plains Financial Inc Do?
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South Plains Financial Inc operates as a bank holding company. The company provides a wide range of commercial and consumer financial services to small and medium-sized businesses and individuals. The principal business activities include commercial and retail banking, along with insurance, investment, trust, and mortgage services. The company has two reportable segments: banking and insurance.
A Glimpse at South Plains Financial Inc's Dividend History
South Plains Financial Inc has maintained a consistent dividend payment record since 2019. Dividends are currently distributed on a quarterly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down South Plains Financial Inc's Dividend Yield and Growth
As of today, South Plains Financial Inc currently has a 12-month trailing dividend yield of 1.88% and a 12-month forward dividend yield of 1.88%. This suggests an expectation of the same dividend payments over the next 12 months. Over the past three years, South Plains Financial Inc's annual dividend growth rate was 97.20%. Based on South Plains Financial Inc's dividend yield and five-year growth rate, the 5-year yield on cost of South Plains Financial Inc stock as of today is approximately 1.88%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-09-30, South Plains Financial Inc's dividend payout ratio is 0.14. South Plains Financial Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks South Plains Financial Inc's profitability 4 out of 10 as of 2023-09-30, suggesting the dividend may not be sustainable. The company has reported net profit in 6 years out of the past 10 years.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. South Plains Financial Inc's growth rank of 4 out of 10 suggests that the company has poor growth prospects and thus, the dividend may not be sustainable. Revenue is the lifeblood of any company, and South Plains Financial Inc's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. South Plains Financial Inc's revenue has increased by approximately 7.80% per year on average, a rate that outperforms approximately 57.92% of global competitors.
The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, South Plains Financial Inc's earnings increased by approximately 23.60% per year on average, a rate that outperforms approximately 80.58% of global competitors. Lastly, the company's 5-year EBITDA growth rate of 20.90%, which outperforms approximately 83.23% of global competitors.
Next Steps for Investors
In conclusion, while South Plains Financial Inc's dividend growth rate and low payout ratio paint a positive picture, the company's moderate profitability and growth ranks raise questions about the long-term sustainability of its dividend payments. Investors should consider these factors in conjunction with the company's solid revenue and earnings growth when evaluating the investment potential of South Plains Financial Inc. For those seeking to diversify their portfolio with high-dividend yield stocks, GuruFocus Premium offers a High Dividend Yield Screener to discover opportunities that align with their investment strategies.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
This article first appeared on GuruFocus.
