In This Article:
Horizon Bancorp, Inc. (NASDAQ:HBNC) will increase its dividend from last year's comparable payment on the 21st of October to $0.16. This takes the annual payment to 3.4% of the current stock price, which is about average for the industry.
Check out our latest analysis for Horizon Bancorp
Horizon 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.
Having distributed dividends for at least 10 years, Horizon Bancorp has a long history of paying out a part of its earnings to shareholders. Past distributions do not necessarily guarantee future ones, but Horizon Bancorp's payout ratio of 29% is a good sign as this means that earnings decently cover dividends.
Over the next year, EPS is forecast to expand by 6.0%. If the dividend continues on this path, the future payout ratio could be 31% by next year, which we think can be pretty sustainable going forward.
Horizon Bancorp Has A Solid Track Record
Even over a long history of paying dividends, the company's distributions have been remarkably stable. Since 2012, the dividend has gone from $0.142 total annually to $0.64. This works out to be a compound annual growth rate (CAGR) of approximately 16% a year over that time. So, dividends have been growing pretty quickly, and even more impressively, they haven't experienced any notable falls during this period.
The Dividend Looks Likely To Grow
Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Horizon Bancorp has impressed us by growing EPS at 19% per year over the past five years. Horizon Bancorp definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.
We Really Like Horizon Bancorp's Dividend
In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. Taking this all into consideration, this looks like it could be a good dividend opportunity.
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. 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 Horizon Bancorp for free with public analyst estimates for the company. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.