Community Trust Bancorp (NASDAQ:CTBI) Has Re-Affirmed Its Dividend Of US$0.39

Community Trust Bancorp, Inc.'s (NASDAQ:CTBI) investors are due to receive a payment of US$0.39 per share on 1st of July. The dividend yield will be 3.5% based on this payment which is still above the industry average.

Check out our latest analysis for Community Trust Bancorp

Community Trust Bancorp's Payment Has Solid Earnings Coverage

A big dividend yield for a few years doesn't mean much if it can't be sustained. However, prior to this announcement, Community Trust Bancorp's dividend was comfortably covered by both cash flow and earnings. As a result, a large proportion of what it earned was being reinvested back into the business.

Over the next year, EPS is forecast to fall by 2.9%. Assuming the dividend continues along recent trends, we believe the payout ratio could be 38%, which we are pretty comfortable with and we think is feasible on an earnings basis.

Community Trust Bancorp Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. Since 2011, the first annual payment was US$1.09, compared to the most recent full-year payment of US$1.54. This implies that the company grew its distributions at a yearly rate of about 3.5% over that duration. While the consistency in the dividend payments is impressive, we think the relatively slow rate of growth is less attractive.

We Could See Community Trust Bancorp's Dividend Growing

Investors could be attracted to the stock based on the quality of its payment history. We are encouraged to see that Community Trust Bancorp has grown earnings per share at 9.8% per year over the past five years. A low payout ratio and decent growth suggests that the company is reinvesting well, and it also has plenty of room to increase the dividend over time.

We Really Like Community Trust Bancorp's Dividend

Overall, we like to see the dividend staying consistent, and we think Community Trust Bancorp might even raise payments in the future. The earnings easily cover the company's distributions, and the company is generating plenty of cash. We do 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.

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. Just as an example, we've come across 2 warning signs for Community Trust Bancorp you should be aware of, and 1 of them is significant. If you are a dividend investor, you might also want to look at our curated list of high performing dividend stock.

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