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German American Bancorp, Inc. (NASDAQ:GABC) has announced that it will be increasing its dividend from last year's comparable payment on the 20th of February to $0.29. Based on this payment, the dividend yield for the company will be 2.8%, which is fairly typical for the industry.
Check out our latest analysis for German American Bancorp
German American Bancorp's Earnings Will Easily Cover The Distributions
While it is always good to see a solid dividend yield, we should also consider whether the payment is feasible.
German American Bancorp has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. Based on German American Bancorp's last earnings report, the payout ratio is at a decent 38%, 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 45.0% over the next 3 years. The future payout ratio could be 33% over that time period, according to analyst estimates, which is a good look for the future of the dividend.
German American Bancorp Has A Solid Track Record
The company has a sustained record of paying dividends with very little fluctuation. The annual payment during the last 10 years was $0.427 in 2015, and the most recent fiscal year payment was $1.16. This implies that the company grew its distributions at a yearly rate of about 11% over that duration. We can see that payments have shown some very nice upward momentum without faltering, which provides some reassurance that future payments will also be reliable.
The Dividend's Growth Prospects Are Limited
Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Earnings have grown at around 4.3% a year for the past five years, which isn't massive but still better than seeing them shrink. While EPS growth is quite low, German American Bancorp has the option to increase the payout ratio to return more cash to shareholders.
German American Bancorp Looks Like A Great Dividend Stock
In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. Earnings are easily covering distributions, and the company is generating plenty of cash. 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. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Companies that are growing earnings tend to be the best dividend stocks over the long term. See what the 5 analysts we track are forecasting for German American Bancorp for free with public analyst estimates for the company. 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.