South Plains Financial (NASDAQ:SPFI) Will Pay A Dividend Of $0.13
The board of South Plains Financial, Inc. (NASDAQ:SPFI) has announced that it will pay a dividend of $0.13 per share on the 12th of February. The dividend yield is 1.9% based on this payment, which is a little bit low compared to the other companies in the industry.
View our latest analysis for South Plains Financial
South Plains Financial's Earnings Will Easily Cover The Distributions
If it is predictable over a long period, even low dividend yields can be attractive.
South Plains Financial has a short history of paying out dividends, with its current track record at only 4 years. While it has a shorter history of paying out dividends, South Plains Financial's payout ratio of 13% is a great sign for current shareholders, as this means that earnings greatly cover dividends.
Looking forward, earnings per share is forecast to fall by 49.1% over the next 3 years. Fortunately, analysts forecast the future payout ratio to be 24% over the same time horizon, which is in the range that makes us comfortable with the sustainability of the dividend.
South Plains Financial Doesn't Have A Long Payment History
The dividend hasn't seen any major cuts in the past, but the company has only been paying a dividend for 4 years, which isn't that long in the grand scheme of things. Since 2020, the dividend has gone from $0.12 total annually to $0.52. This works out to be a compound annual growth rate (CAGR) of approximately 44% a year over that time. South Plains Financial 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
Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. South Plains Financial has seen EPS rising for the last five years, at 15% per annum. A low payout ratio and decent growth suggests that the company is reinvesting well, and it also has plenty of room to increase the dividend over time.
South Plains Financial Looks Like A Great Dividend Stock
Overall, we think that this is a great income investment, and we think that maintaining the dividend this year may have been a conservative choice. The distributions are easily covered by earnings, and there is plenty of cash being generated as well. If earnings do fall over the next 12 months, the dividend could be buffeted a little bit, but we don't think it should cause too much of a problem in the long term. 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. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Just as an example, we've come across 2 warning signs for South Plains Financial you should be aware of, and 1 of them doesn't sit too well with us. Is South Plains Financial not quite the opportunity you were looking for? Why not check out our selection of top 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.
