Yahoo Finance Summit Financial Group (NASDAQ:SMMF) Will Pay A Larger Dividend Than Last Year At US$0.18
Summit Financial Group, Inc.'s (NASDAQ:SMMF) dividend will be increasing to US$0.18 on 30th of September. The announced payment will take the dividend yield to 2.7%, which is in line with the average for the industry.
Check out our latest analysis for Summit Financial Group
Summit Financial Group's Dividend Is Well Covered By Earnings
Unless the payments are sustainable, the dividend yield doesn't mean too much. However, Summit Financial Group's earnings easily cover the dividend. This means that most of what the business earns is being used to help it grow.
Looking forward, earnings per share is forecast to fall by 4.1% over the next year. If the dividend continues along the path it has been on recently, we estimate the payout ratio could be 27%, which is comfortable for the company to continue in the future.
Summit Financial Group Doesn't Have A Long Payment History
Even though the company has been paying a consistent dividend for a while, we would like to see a few more years before we feel comfortable relying on it. The first annual payment during the last 6 years was US$0.32 in 2015, and the most recent fiscal year payment was US$0.72. This means that it has been growing its distributions at 14% per annum over that time. We're not overly excited about the relatively short history of dividend payments, however the dividend is growing at a nice rate and we might take a closer look.
The Dividend Looks Likely To Grow
The company's investors will be pleased to have been receiving dividend income for some time. We are encouraged to see that Summit Financial Group has grown earnings per share at 16% per year over the past five years. Summit Financial Group definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.
We Really Like Summit Financial Group's Dividend
Overall, a dividend increase is always good, and we think that Summit Financial Group is a strong income stock thanks to its track record and growing earnings. The distributions are easily covered by earnings, and there is plenty of cash being generated as well. We should point out that the earnings are expected to fall over the next 12 months, which won't be a problem if this doesn't become a trend, but could cause some turbulence in the next year. All of these factors considered, we think this has solid potential as a dividend stock.
It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. However, there are other things to consider for investors when analysing stock performance. To that end, Summit Financial Group has 2 warning signs (and 1 which doesn't sit too well with us) we think you should know about. We have also put together a list of global stocks with a solid dividend.
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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