Dividends play an important role in compounding returns in the long run and end up forming a sizeable part of investment returns. Southside Bancshares Inc (NASDAQ:SBSI) has returned to shareholders over the past 10 years, an average dividend yield of 4.00% annually. Should it have a place in your portfolio? Let’s take a look at Southside Bancshares in more detail. Check out our latest analysis for Southside Bancshares
5 questions I ask before picking a dividend stock
Whenever I am looking at a potential dividend stock investment, I always check these five metrics:
- Is it paying an annual yield above 75% of dividend payers?
- Has it paid dividend every year without dramatically reducing payout in the past?
- Has the amount of dividend per share grown over the past?
- Can it afford to pay the current rate of dividends from its earnings?
- Based on future earnings growth, will it be able to continue to payout dividend at the current rate?
Does Southside Bancshares pass our checks?
The current trailing twelve-month payout ratio for the stock is 59.18%, which means that the dividend is covered by earnings. However, going forward, analysts expect SBSI’s payout to fall to 48.80% of its earnings, which leads to a dividend yield of 3.48%. However, EPS should increase to $2.45, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment. If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. Whilst its per-share payments have increased during the past 10 years, there has been some hiccups. Investors have seen reductions in the dividend per share in the past, although, it has picked up again. Compared to its peers, Southside Bancshares generates a yield of 3.17%, which is on the low-side for Banks stocks.
Taking into account the dividend metrics, Southside Bancshares ticks most of the boxes as a strong dividend investment, putting it in my list of top dividend payers. Given that this is purely a dividend analysis, you should always research extensively before deciding whether or not a stock is an appropriate investment for you. I always recommend analysing the company’s fundamentals and underlying business before making an investment decision. Below, I’ve compiled three essential aspects you should look at:
- Future Outlook: What are well-informed industry analysts predicting for SBSI’s future growth? Take a look at our free research report of analyst consensus for SBSI’s outlook.
- Valuation: What is SBSI worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether SBSI is currently mispriced by the market.
- Other Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.