Stock Analysis

Community Trust Bancorp's (NASDAQ:CTBI) Shareholders Will Receive A Bigger Dividend Than Last Year

NasdaqGS:CTBI
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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 $0.44. This takes the dividend yield to 4.1%, which shareholders will be pleased with.

Check out 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 established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. Based on Community Trust Bancorp's last earnings report, the payout ratio is at a decent 35%, 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 2.2%. But if the dividend continues along recent trends, we estimate the future payout ratio could be 39%, which we would consider to be quite comfortable looking forward, with most of the company's earnings left over to grow the business in the future.

historic-dividend
NasdaqGS:CTBI Historic Dividend August 8th 2022

Community Trust Bancorp Has A Solid Track Record

The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. Since 2012, the annual payment back then was $1.13, compared to the most recent full-year payment of $1.76. This implies that the company grew its distributions at a yearly rate of about 4.6% over that duration. Dividends have grown relatively slowly, which is not great, but some investors may value the relative consistency of the dividend.

The Dividend Looks Likely To Grow

The company's investors will be pleased to have been receiving dividend income for some time. It's encouraging to see that Community Trust Bancorp has been growing its earnings per share at 11% a year over the past five years. 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.

We Really Like Community Trust Bancorp's Dividend

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. The company is generating plenty of cash, and the earnings also quite easily cover the distributions. 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.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. 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 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.