BancFirst's (NASDAQ:BANF) Dividend Will Be Increased To $0.46

BancFirst Corporation (NASDAQ:BANF) will increase its dividend on the 15th of October to $0.46, which is 7.0% higher than last year's payment from the same period of $0.43. Even though the dividend went up, the yield is still quite low at only 1.6%.

See our latest analysis for BancFirst

BancFirst's Dividend Forecasted To Be Well Covered By Earnings

It would be nice for the yield to be higher, but we should also check if higher levels of dividend payment would be sustainable.

BancFirst has a long history of paying out dividends, with its current track record at a minimum of 10 years. Taking data from its last earnings report, calculating for the company's payout ratio shows 28%, which means that BancFirst would be able to pay its last dividend without pressure on the balance sheet.

EPS is set to fall by 1.6% over the next 12 months. But if the dividend continues along recent trends, we estimate the future payout ratio could be 32%, which we would consider to be quite comfortable looking forward, with most of the company's earnings left over to grow the business in the future.

BancFirst Has A Solid Track Record

The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. Since 2014, the dividend has gone from $0.62 total annually to $1.72. This implies that the company grew its distributions at a yearly rate of about 11% over that duration. Rapidly growing dividends for a long time is a very valuable feature for an income stock.

We Could See BancFirst's Dividend Growing

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. We are encouraged to see that BancFirst has grown earnings per share at 8.6% 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.

BancFirst Looks Like A Great Dividend Stock

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 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 of these factors considered, we think this has solid potential as a dividend stock.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. However, there are other things to consider for investors when analysing stock performance. To that end, BancFirst has 2 warning signs (and 1 which is significant) we think you should know about. 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.