BancFirst's (NASDAQ:BANF) Shareholders Will Receive A Bigger Dividend Than Last Year

BancFirst Corporation's (NASDAQ:BANF) dividend will be increasing from last year's payment of the same period to $0.40 on 17th of July. Although the dividend is now higher, the yield is only 1.9%, which is below the industry average.

View our latest analysis for BancFirst

BancFirst's Dividend Forecasted To Be Well Covered By Earnings

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

Having distributed dividends for at least 10 years, BancFirst has a long history of paying out a part of its 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.

Over the next year, EPS is forecast to fall by 11.2%. But if the dividend continues along the path it has been on recently, we estimate the future payout ratio could be 31%, which would be comfortable for the company to continue in the future.

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 $0.58 in 2013, and the most recent fiscal year payment was $1.60. 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.

The Dividend Looks Likely To Grow

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. BancFirst has impressed us by growing EPS at 17% per year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for BancFirst's prospects of growing its dividend payments in the future.

BancFirst Looks Like A Great Dividend Stock

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. 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.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. However, there are other things to consider for investors when analysing stock performance. Taking the debate a bit further, we've identified 1 warning sign for BancFirst that investors need to be conscious of moving forward. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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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.