SB Financial Group, Inc.'s (NASDAQ:SBFG) investors are due to receive a payment of $0.12 per share on 26th of August. Based on this payment, the dividend yield will be 2.8%, which is fairly typical for the industry.
SB Financial Group's Payment Expected To Have Solid Earnings Coverage
We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue.
Having paid out dividends for 9 years, SB Financial Group has a good history of paying out a part of its earnings to shareholders. Using data from its latest earnings report, SB Financial Group's payout ratio sits at 25%, an extremely comfortable number that shows that it can pay its dividend.
Over the next year, EPS is forecast to fall by 5.9%. But if the dividend continues along recent trends, we estimate the future payout ratio could be 30%, which we would consider to be quite comfortable looking forward, with most of the company's earnings left over to grow the business in the future.
SB Financial Group Is Still Building Its Track Record
SB Financial Group's dividend has been pretty stable for a little while now, but we will continue to be cautious until it has been demonstrated for a few more years. Since 2013, the dividend has gone from $0.0952 total annually to $0.48. This implies that the company grew its distributions at a yearly rate of about 20% over that duration. It is always nice to see strong dividend growth, but with such a short payment history we wouldn't be inclined to rely on it until a longer track record can be developed.
SB Financial Group May Find It Hard To Grow The Dividend
Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. However, SB Financial Group has only grown its earnings per share at 2.9% per annum over the past five years. While EPS growth is quite low, SB Financial Group has the option to increase the payout ratio to return more cash to shareholders.
Our Thoughts On SB Financial Group's Dividend
In summary, we are pleased with the dividend remaining consistent, and we think there is a good chance of this continuing in the future. The payout ratio looks good, but unfortunately the company's dividend track record isn't stellar. This looks like it could be a good dividend stock going forward, but we would note that the payout ratio has been at higher levels in the past so it could happen again.
Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Just as an example, we've come across 3 warning signs for SB Financial Group you should be aware of, and 1 of them is a bit unpleasant. 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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