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Seacoast Banking Corporation of Florida (NASDAQ:SBCF) has announced that it will pay a dividend of $0.18 per share on the 30th of June. This means the dividend yield will be fairly typical at 3.0%.
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Seacoast Banking Corporation of Florida's Dividend Forecasted To Be Well Covered By Earnings
Unless the payments are sustainable, the dividend yield doesn't mean too much.
Seacoast Banking Corporation of Florida is just starting to establish itself as being able to pay dividends to shareholders, given its short 4-year history of distributing earnings. Diving into the company's earnings report, the payout ratio is set at 50%, which is a decent ratio of dividend payout to earnings, and may sustain future dividends if the company stays at its current trend.
Looking forward, EPS is forecast to rise by 60.3% over the next 3 years. Analysts estimate the future payout ratio will be 38% over the same time period, which is in the range that makes us comfortable with the sustainability of the dividend.
See our latest analysis for Seacoast Banking Corporation of Florida
Seacoast Banking Corporation of Florida Doesn't Have A Long Payment History
The dividend hasn't seen any major cuts in the past, but the company has only been paying a dividend for 4 years, which isn't that long in the grand scheme of things. The annual payment during the last 4 years was $0.52 in 2021, and the most recent fiscal year payment was $0.72. This works out to be a compound annual growth rate (CAGR) of approximately 8.5% a year over that time. The dividend has been growing as a reasonable rate, which we like. However, investors will probably want to see a longer track record before they consider Seacoast Banking Corporation of Florida to be a consistent dividend paying stock.
Dividend Growth May Be Hard To Come By
Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Unfortunately things aren't as good as they seem. In the last five years, Seacoast Banking Corporation of Florida's earnings per share has shrunk at approximately 5.7% per annum. Declining earnings will inevitably lead to the company paying a lower dividend in line with lower profits. However, the next year is actually looking up, with earnings set to rise. We would just wait until it becomes a pattern before getting too excited.
Our Thoughts On Seacoast Banking Corporation of Florida's Dividend
Overall, it's nice to see a consistent dividend payment, but we think that longer term, the current level of payment might be unsustainable. While Seacoast Banking Corporation of Florida is earning enough to cover the dividend, we are generally unimpressed with its future prospects. Overall, we don't think this company has the makings of a good income stock.