Sierra Bancorp (NASDAQ:BSRR) Is Paying Out A Larger Dividend Than Last Year

Sierra Bancorp (NASDAQ:BSRR) will increase its dividend on the 15th of August to $0.24, which is 4.3% higher than last year's payment from the same period of $0.23. The payment will take the dividend yield to 3.3%, which is in line with the average for the industry.

While the dividend yield is important for income investors, it is also important to consider any large share price moves, as this will generally outweigh any gains from distributions. Investors will be pleased to see that Sierra Bancorp's stock price has increased by 41% in the last 3 months, which is good for shareholders and can also explain a decrease in the dividend yield.

View our latest analysis for Sierra Bancorp

Sierra Bancorp's Earnings Will Easily Cover The Distributions

Unless the payments are sustainable, the dividend yield doesn't mean too much.

Sierra Bancorp has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. Taking data from its last earnings report, calculating for the company's payout ratio shows 38%, which means that Sierra Bancorp would be able to pay its last dividend without pressure on the balance sheet.

The next year is set to see EPS grow by 5.7%. If the dividend continues along recent trends, we estimate the future payout ratio will be 40%, which is in the range that makes us comfortable with the sustainability of the dividend.

Sierra Bancorp Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2014, the dividend has gone from $0.28 total annually to $0.92. This implies that the company grew its distributions at a yearly rate of about 13% 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.

Sierra Bancorp May Find It Hard To Grow The Dividend

Investors could be attracted to the stock based on the quality of its payment history. However, Sierra Bancorp has only grown its earnings per share at 3.5% per annum over the past five years. While growth may be thin on the ground, Sierra Bancorp could always pay out a higher proportion of earnings to increase shareholder returns.

Sierra Bancorp 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. Earnings are easily covering distributions, and the company is generating plenty of cash. All of these factors considered, we think this has solid potential as a dividend stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For instance, we've picked out 1 warning sign for Sierra Bancorp that investors should take into consideration. Is Sierra 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.

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