BancFirst (NASDAQ:BANF) Is Due To Pay A Dividend Of $0.46

The board of BancFirst Corporation (NASDAQ:BANF) has announced that it will pay a dividend on the 15th of April, with investors receiving $0.46 per share. Even though the dividend went up, the yield is still quite low at only 1.6%.

See our latest analysis for BancFirst

BancFirst's Payment Expected To Have Solid Earnings Coverage

While yield is important, another factor to consider about a company's dividend is whether the current payout levels are feasible.

BancFirst has a long history of paying out dividends, with its current track record at a minimum of 10 years. Based on BancFirst's last earnings report, the payout ratio is at a decent 27%, meaning that the company is able to pay out its dividend with a bit of room to spare.

Over the next 3 years, EPS is forecast to fall by 1.8%. Fortunately, analysts forecast the future payout ratio to be 30% over the same time horizon, which is in the range that makes us comfortable with the sustainability of the dividend.

BancFirst Has A Solid Track Record

The company has an extended history of paying stable dividends. The annual payment during the last 10 years was $0.62 in 2015, and the most recent fiscal year payment was $1.84. This implies that the company grew its distributions at a yearly rate of about 11% over that duration. It is good to see that there has been strong dividend growth, and that there haven't been any cuts for a long time.

The Dividend Has Growth Potential

The company's investors will be pleased to have been receiving dividend income for some time. We are encouraged to see that BancFirst has grown earnings per share at 9.5% per year over the past five years. Growth in EPS bodes well for the dividend, as does the low payout ratio that the company is currently reporting.

We Really Like BancFirst's Dividend

Overall, a dividend increase is always good, and we think that BancFirst is a strong income stock thanks to its track record and growing earnings. The distributions are easily covered by earnings, and there is plenty of cash being generated as well. If earnings do fall over the next 12 months, the dividend could be buffeted a little bit, but we don't think it should cause too much of a problem in the long term. 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. As an example, we've identified 1 warning sign for BancFirst that you should be aware of before investing. Is BancFirst 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.