In This Article:
The board of Home Bancshares, Inc. (Conway, AR) (NYSE:HOMB) has announced that the dividend on 4th of September will be increased to $0.195, which will be 8.3% higher than last year's payment of $0.18 which covered the same period. Although the dividend is now higher, the yield is only 2.5%, which is below the industry average.
See our latest analysis for Home Bancshares (Conway AR)
Home Bancshares (Conway AR)'s Earnings Will Easily Cover The Distributions
While yield is important, another factor to consider about a company's dividend is whether the current payout levels are feasible.
Having distributed dividends for at least 10 years, Home Bancshares (Conway AR) has a long history of paying out a part of its earnings to shareholders. Past distributions do not necessarily guarantee future ones, but Home Bancshares (Conway AR)'s payout ratio of 37% is a good sign as this means that earnings decently cover dividends.
Over the next 3 years, EPS is forecast to expand by 18.7%. The future payout ratio could be 35% over that time period, according to analyst estimates, which is a good look for the future of the dividend.
Home Bancshares (Conway AR) 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 2014, the dividend has gone from $0.15 total annually to $0.72. This implies that the company grew its distributions at a yearly rate of about 17% 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 2.4% a year for the past five years, which isn't massive but still better than seeing them shrink. While EPS growth is quite low, Home Bancshares (Conway AR) has the option to increase the payout ratio to return more cash to shareholders.
Home Bancshares (Conway AR) 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. However, there are other things to consider for investors when analysing stock performance. As an example, we've identified 1 warning sign for Home Bancshares (Conway AR) that you should be aware of before investing. Is Home Bancshares (Conway AR) not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.