Old Second Bancorp, Inc. (NASDAQ:OSBC) has announced that it will pay a dividend of $0.06 per share on the 4th of August. The dividend yield is 1.3% based on this payment, which is a little bit low compared to the other companies in the industry.
Even a low dividend yield can be attractive if it is sustained for years on end.
Old Second Bancorp has a good history of paying out dividends, with its current track record at 9 years. Using data from its latest earnings report, Old Second Bancorp’s payout ratio sits at 12%, an extremely comfortable number that shows that it can pay its dividend.
Looking forward, earnings per share is forecast to rise by 7.5% over the next year. Assuming the dividend continues along recent trends, we think the future payout ratio could be 15% by next year, which is in a pretty sustainable range.
Check out our latest analysis for Old Second Bancorp
Old Second Bancorp’s dividend has been pretty stable for a little while now, but we will continue to be cautious until it has been demonstrated for a few more years. Since 2016, the annual payment back then was $0.04, compared to the most recent full-year payment of $0.24. This implies that the company grew its distributions at a yearly rate of about 22% over that duration. The dividend has been growing rapidly, however with such a short payment history we can’t know for sure if payment can continue to grow over the long term, so caution may be warranted.
Investors could be attracted to the stock based on the quality of its payment history. We are encouraged to see that Old Second Bancorp has grown earnings per share at 12% per year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for Old Second Bancorp’s prospects of growing its dividend payments in the future.
Overall, we like to see the dividend staying consistent, and we think Old Second Bancorp might even raise payments in the future. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All in all, this checks a lot of the boxes we look for when choosing an income stock.
Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Earnings growth generally bodes well for the future value of company dividend payments. See if the 5 Old Second Bancorp analysts we track are forecasting continued growth with our free report on analyst estimates for the company. Is Old Second 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.
