Yahoo Finance SmartFinancial (NYSE:SMBK) Is Due To Pay A Dividend Of $0.08
SmartFinancial, Inc.'s (NYSE:SMBK) investors are due to receive a payment of $0.08 per share on 26th of August. This payment means the dividend yield will be 1.1%, which is below the average for the industry.
While the dividend yield is important for income investors, it is also important to consider any large share price moves, as this will generally outweigh any gains from distributions. Investors will be pleased to see that SmartFinancial's stock price has increased by 38% in the last 3 months, which is good for shareholders and can also explain a decrease in the dividend yield.
View our latest analysis for SmartFinancial
SmartFinancial's Payment Expected To Have Solid Earnings Coverage
While yield is important, another factor to consider about a company's dividend is whether the current payout levels are feasible.
SmartFinancial has established itself as a dividend paying company, given its 5-year history of distributing earnings to shareholders. Using data from its latest earnings report, SmartFinancial's payout ratio sits at 10%, an extremely comfortable number that shows that it can pay its dividend.
Looking forward, earnings per share is forecast to rise by 23.8% over the next year. If the dividend continues along recent trends, we estimate the future payout ratio will be 20%, which is in the range that makes us comfortable with the sustainability of the dividend.
SmartFinancial Doesn't Have A Long Payment History
It is great to see that SmartFinancial has been paying a stable dividend for a number of years now, however we want to be a bit cautious about whether this will remain true through a full economic cycle. The annual payment during the last 5 years was $0.20 in 2019, and the most recent fiscal year payment was $0.32. This works out to be a compound annual growth rate (CAGR) of approximately 9.9% a year over that time. SmartFinancial has been growing its dividend at a decent rate, and the payments have been stable. However, the payment history is very short, so there is no evidence yet that the dividend can be sustained over a full economic cycle.
SmartFinancial 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, initial appearances might be deceiving. It's not great to see that SmartFinancial's earnings per share has fallen at approximately 3.6% per year over the past five years. If earnings continue declining, the company may have to make the difficult choice of reducing the dividend or even stopping it completely - the opposite of dividend growth. Earnings are forecast to grow over the next 12 months and if that happens we could still be a little bit cautious until it becomes a pattern.
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 SmartFinancial has been making. This company is not in the top tier of income providing stocks.
Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. However, there are other things to consider for investors when analysing stock performance. Taking the debate a bit further, we've identified 2 warning signs for SmartFinancial that investors need to be conscious of moving forward. Is SmartFinancial 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.
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