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Independent Bank Corporation's (NASDAQ:IBCP) investors are due to receive a payment of $0.24 per share on 15th of November. This means the dividend yield will be fairly typical at 2.9%.
See our latest analysis for Independent Bank
Independent Bank'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, Independent Bank has a long history of paying out a part of its earnings to shareholders. While past records don't necessarily translate into future results, the company's payout ratio of 7.8% also shows that Independent Bank is able to comfortably pay dividends.
Looking forward, EPS is forecast to rise by 6.4% 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.
Independent Bank Has A Solid Track Record
The company has a sustained record of paying dividends with very little fluctuation. Since 2014, the dividend has gone from $0.24 total annually to $0.96. This implies that the company grew its distributions at a yearly rate of about 15% over that duration. 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. We are encouraged to see that Independent Bank has grown earnings per share at 10% per year over the past five years. Independent Bank definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.
Independent Bank Looks Like A Great Dividend Stock
Overall, we like to see the dividend staying consistent, and we think Independent Bank might even raise payments in the future. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All of these factors considered, we think this has solid potential as a dividend stock.
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. Taking the debate a bit further, we've identified 1 warning sign for Independent Bank that investors need to be conscious of moving forward. If you are a dividend investor, you might also want to look at our curated list of high yield 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.