TriCo Bancshares (NASDAQ:TCBK) has announced that it will be increasing its dividend from last year's comparable payment on the 23rd of September to $0.30. Based on this payment, the dividend yield for the company will be 2.5%, which is fairly typical for the industry.
TriCo Bancshares' Earnings Will Easily Cover The Distributions
We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue.
TriCo Bancshares has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. Based on TriCo Bancshares' last earnings report, the payout ratio is at a decent 29%, meaning that the company is able to pay out its dividend with a bit of room to spare.
Looking forward, EPS is forecast to rise by 31.8% over the next 3 years. Analysts forecast the future payout ratio could be 25% over the same time horizon, which is a number we think the company can maintain.
TriCo Bancshares Has A Solid Track Record
The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. Since 2012, the dividend has gone from $0.36 total annually to $1.20. This implies that the company grew its distributions at a yearly rate of about 13% over that duration. It is good to see that there has been strong dividend growth, and that there haven't been any cuts for a long time.
The Dividend Has Growth Potential
Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. TriCo Bancshares has seen EPS rising for the last five years, at 7.9% per annum. With a decent amount of growth and a low payout ratio, we think this bodes well for TriCo Bancshares' prospects of growing its dividend payments in the future.
An additional note is that the company has been raising capital by issuing stock equal to 12% of shares outstanding in the last 12 months. Trying to grow the dividend when issuing new shares reminds us of the ancient Greek tale of Sisyphus - perpetually pushing a boulder uphill. Companies that consistently issue new shares are often suboptimal from a dividend perspective.
We Really Like TriCo Bancshares' Dividend
Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. Taking this all into consideration, this looks like it could be a good dividend opportunity.
Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For example, we've picked out 1 warning sign for TriCo Bancshares that investors should know about before committing capital to this stock. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.
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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.
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