BancFirst (NASDAQ:BANF) Will Pay A Dividend Of $0.43

The board of BancFirst Corporation (NASDAQ:BANF) has announced that it will pay a dividend of $0.43 per share on the 16th of January. Although the dividend is now higher, the yield is only 1.8%, which is below the industry average.

View our latest analysis for BancFirst

BancFirst's Earnings Will Easily Cover The Distributions

Even a low dividend yield can be attractive if it is sustained for years on end.

BancFirst has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. While past data isn't a guarantee for the future, BancFirst's latest earnings report puts its payout ratio at 24%, showing that the company can pay out its dividends comfortably.

Looking forward, earnings per share is forecast to fall by 28.5% over the next 3 years. Fortunately, analysts forecast the future payout ratio to be 34% 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 a sustained record of paying dividends with very little fluctuation. The annual payment during the last 10 years was $0.58 in 2013, and the most recent fiscal year payment was $1.72. This works out to be a compound annual growth rate (CAGR) of approximately 11% a year over that time. Rapidly growing dividends for a long time is a very valuable feature for an income stock.

The Dividend Looks Likely To Grow

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. BancFirst has impressed us by growing EPS at 14% 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

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. The earnings easily cover the company's distributions, and the company is generating plenty of cash. We should point out that the earnings are expected to fall over the next 12 months, which won't be a problem if this doesn't become a trend, but could cause some turbulence in the next year. All in all, this checks a lot of the boxes we look for when choosing an income stock.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. However, there are other things to consider for investors when analysing stock performance. 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.