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Sierra Bancorp's (NASDAQ:BSRR) investors are due to receive a payment of $0.24 per share on 12th of November. This means the dividend yield will be fairly typical at 3.4%.
See our latest analysis for Sierra Bancorp
Sierra Bancorp's Dividend Forecasted To Be Well Covered By Earnings
We aren't too impressed by dividend yields unless they can be sustained over time.
Sierra Bancorp has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. Past distributions do not necessarily guarantee future ones, but Sierra Bancorp's payout ratio of 37% is a good sign as this means that earnings decently cover dividends.
Over the next 3 years, EPS is forecast to expand by 13.9%. Analysts estimate the future payout ratio will be 34% over the same time period, which is in the range that makes us comfortable with the sustainability of the dividend.
Sierra Bancorp Has A Solid Track Record
The company has an extended history of paying stable dividends. Since 2014, the annual payment back then was $0.32, compared to the most recent full-year payment of $0.96. This means that it has been growing its distributions at 12% per annum over that time. So, dividends have been growing pretty quickly, and even more impressively, they haven't experienced any notable falls during this period.
The Dividend's Growth Prospects Are Limited
The company's investors will be pleased to have been receiving dividend income for some time. However, Sierra Bancorp has only grown its earnings per share at 2.7% per annum over the past five years. While growth may be thin on the ground, Sierra Bancorp could always pay out a higher proportion of earnings to increase shareholder returns.
Sierra Bancorp Looks Like A Great Dividend Stock
Overall, we think that this is a great income investment, and we think that maintaining the dividend this year may have been a conservative choice. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All of these factors considered, we think this has solid potential as a dividend stock.
It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Taking the debate a bit further, we've identified 1 warning sign for Sierra Bancorp that investors need to be conscious of moving forward. Is Sierra Bancorp 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.