Seacoast Banking Corporation of Florida (NASDAQ:SBCF) has announced that it will pay a dividend of $0.18 per share on the 28th of June. Based on this payment, the dividend yield will be 3.0%, which is fairly typical for the industry.

View our latest analysis for Seacoast Banking Corporation of Florida

Seacoast Banking Corporation of Florida's Payment Expected To Have Solid Earnings Coverage

We aren't too impressed by dividend yields unless they can be sustained over time.

Seacoast Banking Corporation of Florida is just starting to establish itself as being able to pay dividends to shareholders, given its short 3-year history of distributing earnings. Taking data from Seacoast Banking Corporation of Florida's last earnings report, the payout ratio is at a decent 52%, meaning that the company is able to pay out its dividend with some room to spare.

Looking forward, earnings per share is forecast to rise by 8.9% over the next year. If the dividend continues along recent trends, we estimate the future payout ratio will be 47%, which is in the range that makes us comfortable with the sustainability of the dividend.

Seacoast Banking Corporation of Florida Is Still Building Its Track Record

The dividend hasn't seen any major cuts in the past, but the company has only been paying a dividend for 3 years, which isn't that long in the grand scheme of things. Since 2021, the dividend has gone from $0.52 total annually to $0.72. This works out to be a compound annual growth rate (CAGR) of approximately 11% a year over that time. Seacoast Banking Corporation of Florida 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.

Dividend Growth May Be Hard To Achieve

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. However, things aren't all that rosy. Unfortunately, Seacoast Banking Corporation of Florida's earnings per share has been essentially flat over the past five years, which means the dividend may not be increased each year.

In Summary

Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. The low payout ratio is a redeeming feature, but generally we are not too happy with the payments Seacoast Banking Corporation of Florida has been making. We would probably look elsewhere for an income investment.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For example, we've picked out 1 warning sign for Seacoast Banking Corporation of Florida that investors should know about before committing capital to this stock. 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.