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The board of Origin Bancorp, Inc. (NYSE:OBK) has announced that it will pay a dividend of $0.15 per share on the 30th of August. This payment means the dividend yield will be 1.7%, which is below the average for the industry.
See our latest analysis for Origin Bancorp
Origin Bancorp'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 paid out dividends for 6 years, Origin Bancorp has a good 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 23% also shows that Origin Bancorp is able to comfortably pay dividends.
Over the next year, EPS is forecast to expand by 3.2%. If the dividend continues on this path, the future payout ratio could be 27% by next year, which we think can be pretty sustainable going forward.
Origin Bancorp Is Still Building Its Track Record
It is great to see that Origin Bancorp has been paying a stable dividend for a number of years now, however we want to be a bit cautious about whether this will remain true through a full economic cycle. Since 2018, the dividend has gone from $0.13 total annually to $0.60. This works out to be a compound annual growth rate (CAGR) of approximately 29% a year over that time. It is always nice to see strong dividend growth, but with such a short payment history we wouldn't be inclined to rely on it until a longer track record can be developed.
Dividend Growth May Be Hard To Achieve
Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. However, Origin Bancorp has only grown its earnings per share at 3.5% per annum over the past five years. If Origin Bancorp is struggling to find viable investments, it always has the option to increase its payout ratio to pay more to shareholders.
Our Thoughts On Origin Bancorp's Dividend
Overall, we think Origin Bancorp is a solid choice as a dividend stock, even though the dividend wasn't raised this year. While the payout ratios are a good sign, we are less enthusiastic about the company's dividend record. The dividend looks okay, but there have been some issues in the past, so we would be a little bit cautious.
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. For example, we've picked out 1 warning sign for Origin Bancorp that investors should know about before committing capital to this stock. Is Origin Bancorp not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.