Stellar Bancorp (NYSE:STEL) Has Affirmed Its Dividend Of $0.13
Stellar Bancorp, Inc. (NYSE:STEL) has announced that it will pay a dividend of $0.13 per share on the 29th of December. The dividend yield is 2.2% based on this payment, which is a little bit low compared to the other companies in the industry.
Check out our latest analysis for Stellar Bancorp
Stellar Bancorp's Earnings Will Easily Cover The Distributions
If it is predictable over a long period, even low dividend yields can be attractive.
Stellar Bancorp has a short history of paying out dividends, with its current track record at only 4 years. Diving into the company's earnings report, the payout ratio is set at 26%, which is a decent ratio of dividend payout to earnings, and may sustain future dividends if the company stays at its current trend.
Looking forward, earnings per share is forecast to fall by 1.4% over the next 3 years. However, as estimated by analysts, the future payout ratio could be 25% over the same time period, which we think the company can easily maintain.
Stellar Bancorp's Dividend Has Lacked Consistency
Looking back, the company hasn't been paying the most consistent dividend, but with such a short dividend history it could be too early to draw solid conclusions. The dividend has gone from an annual total of $0.40 in 2019 to the most recent total annual payment of $0.52. This implies that the company grew its distributions at a yearly rate of about 6.8% over that duration. We have seen cuts in the past, so while the growth looks promising we would be a little bit cautious about its track record.
The Dividend's Growth Prospects Are Limited
Given that the dividend has been cut in the past, we need to check if earnings are growing and if that might lead to stronger dividends in the future. However, Stellar Bancorp's EPS was effectively flat over the past five years, which could stop the company from paying more every year.
In Summary
Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. The low payout ratio is a redeeming feature, but generally we are not too happy with the payments Stellar Bancorp has been making. We would be a touch cautious of relying on this stock primarily for the dividend income.
Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For example, we've identified 2 warning signs for Stellar Bancorp (1 is concerning!) that you should be aware of before investing. If you are a dividend investor, you might also want to look at our curated list of high yield 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.
