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Independent Bank Corporation (NASDAQ:IBCP) will increase its dividend on the 14th of February to $0.26, which is 8.3% higher than last year's payment from the same period of $0.24. The payment will take the dividend yield to 2.8%, which is in line with the average for the industry.
See our latest analysis for Independent Bank
Independent Bank's Dividend Forecasted To Be Well Covered By Earnings
We aren't too impressed by dividend yields unless they can be sustained over time.
Independent Bank has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. Based on Independent Bank's last earnings report, the payout ratio is at a decent 32%, meaning that the company is able to pay out its dividend with a bit of room to spare.
The next 3 years are set to see EPS grow by 8.9%. Analysts forecast the future payout ratio could be 33% over the same time horizon, which is a number we think the company can maintain.
Independent Bank 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 2015, the dividend has gone from $0.24 total annually to $0.96. This means that it has been growing its distributions at 15% per annum over that time. Rapidly growing dividends for a long time is a very valuable feature for an income stock.
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. Independent Bank has impressed us by growing EPS 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.
We Really Like Independent Bank's Dividend
Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. Earnings are easily covering distributions, and the company is generating plenty of cash. 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. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. As an example, we've identified 1 warning sign for Independent Bank that you should be aware of before investing. Is Independent Bank not quite the opportunity you were looking for? Why not check out our selection of top 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.