Community Trust Bancorp (NASDAQ:CTBI) Will Pay A Larger Dividend Than Last Year At $0.46

Community Trust Bancorp, Inc. (NASDAQ:CTBI) has announced that it will be increasing its dividend from last year's comparable payment on the 1st of October to $0.46. This will take the annual payment to 4.7% of the stock price, which is above what most companies in the industry pay.

See our latest analysis for Community Trust Bancorp

Community Trust Bancorp's Dividend Forecasted To Be Well Covered By Earnings

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained.

Community Trust Bancorp has a long history of paying out dividends, with its current track record at a minimum of 10 years. Past distributions do not necessarily guarantee future ones, but Community Trust Bancorp's payout ratio of 39% is a good sign as this means that earnings decently cover dividends.

Looking forward, earnings per share is forecast to fall by 10.7% over the next year. 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. The annual payment during the last 10 years was $1.15 in 2013, and the most recent fiscal year payment was $1.84. This implies that the company grew its distributions at a yearly rate of about 4.9% over that duration. 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.

Community Trust Bancorp Could Grow Its Dividend

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Community Trust Bancorp has seen EPS rising for the last five years, at 7.1% per annum. With a decent amount of growth and a low payout ratio, we think this bodes well for Community Trust Bancorp's prospects of growing its dividend payments in the future.

Community Trust Bancorp Looks Like A Great Dividend Stock

Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. 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.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. 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.