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Investar Holding Corporation (NASDAQ:ISTR) will pay a dividend of $0.095 on the 28th of April. Including this payment, the dividend yield on the stock will be 2.5%, which is a modest boost for shareholders' returns.
View our latest analysis for Investar Holding
Investar Holding's Dividend Forecasted To Be Well Covered By Earnings
If it is predictable over a long period, even low dividend yields can be attractive.
Investar Holding has a good history of paying out dividends, with its current track record at 8 years. Using data from its latest earnings report, Investar Holding's payout ratio sits at 10%, an extremely comfortable number that shows that it can pay its dividend.
Over the next 3 years, EPS is forecast to fall by 51.5%. Fortunately, analysts forecast the future payout ratio to be 17% over the same time horizon, which is in the range that makes us comfortable with the sustainability of the dividend.
Investar Holding Doesn't Have A Long Payment History
Even though the company has been paying a consistent dividend for a while, we would like to see a few more years before we feel comfortable relying on it. The dividend has gone from an annual total of $0.0272 in 2015 to the most recent total annual payment of $0.38. This works out to be a compound annual growth rate (CAGR) of approximately 39% a year over that time. Investar Holding has been growing its dividend quite rapidly, which is exciting. However, the short payment history makes us question whether this performance will persist across a full market cycle.
The Dividend Looks Likely To Grow
The company's investors will be pleased to have been receiving dividend income for some time. Investar Holding has impressed us by growing EPS at 30% per year over the past five years. Earnings have been growing rapidly, and with a low payout ratio we think that the company could turn out to be a great dividend stock.
Investar Holding Looks Like A Great Dividend Stock
In summary, it is good to see that the dividend is staying consistent, and we don't think there is any reason to suspect this might change over the medium term. The distributions are easily covered by earnings, and there is plenty of cash being generated as well. However, it is worth noting that the earnings are expected to fall over the next year, which may not change the long term outlook, but could affect the dividend payment in the next 12 months. 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. Case in point: We've spotted 3 warning signs for Investar Holding (of which 1 is significant!) you should know about. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.