Community Trust Bancorp (NASDAQ:CTBI) Has Announced That It Will Be Increasing Its Dividend To $0.46

Community Trust Bancorp, Inc.'s (NASDAQ:CTBI) dividend will be increasing from last year's payment of the same period to $0.46 on 1st of October. This makes the dividend yield 5.2%, which is above the industry average.

See our latest analysis for Community Trust Bancorp

Community Trust Bancorp's Payment Expected To Have Solid Earnings Coverage

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable.

Community Trust Bancorp has a long history of paying out dividends, with its current track record at a minimum of 10 years. Based on Community Trust Bancorp's last earnings report, the payout ratio is at a decent 39%, meaning that the company is able to pay out its dividend with a bit of room to spare.

Over the next year, EPS is forecast to fall by 10.7%. But assuming the dividend continues along recent trends, we believe the future payout ratio could be 46%, which we are pretty comfortable with and we think would be feasible on an earnings basis.

Community Trust Bancorp Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2013, the dividend has gone from $1.15 total annually to $1.84. This works out to be a compound annual growth rate (CAGR) of approximately 4.9% a year over that time. Slow and steady dividend growth might not sound that exciting, but dividends have been stable for ten years, which we think makes this a fairly attractive offer.

The Dividend Has Growth Potential

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. It's encouraging to see that Community Trust Bancorp has been growing its earnings per share at 7.1% a 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.

Community Trust Bancorp Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that Community Trust Bancorp 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. 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.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. However, there are other things to consider for investors when analysing stock performance. For instance, we've picked out 1 warning sign for Community Trust Bancorp that investors should take into consideration. Is Community Trust 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.