Home Bancorp's (NASDAQ:HBCP) Dividend Will Be Increased To $0.26

Home Bancorp, Inc. (NASDAQ:HBCP) will increase its dividend on the 8th of November to $0.26, which is 4.0% higher than last year's payment from the same period of $0.25. Although the dividend is now higher, the yield is only 2.2%, which is below the industry average.

View our latest analysis for Home Bancorp

Home Bancorp's Dividend Forecasted To Be Well Covered By Earnings

If it is predictable over a long period, even low dividend yields can be attractive.

Having distributed dividends for at least 10 years, Home Bancorp has a long history of paying out a part of its earnings to shareholders. Using data from its latest earnings report, Home Bancorp's payout ratio sits at 22%, an extremely comfortable number that shows that it can pay its dividend.

Looking forward, EPS is forecast to rise by 9.5% over the next 3 years. The future payout ratio could be 22% over that time period, according to analyst estimates, which is a good look for the future of the dividend.

Home Bancorp Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. Since 2014, the dividend has gone from $0.28 total annually to $1.00. This implies that the company grew its distributions at a yearly rate of about 14% over that duration. So, dividends have been growing pretty quickly, and even more impressively, they haven't experienced any notable falls during this period.

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. Home Bancorp has seen EPS rising for the last five years, at 6.8% per annum. With a decent amount of growth and a low payout ratio, we think this bodes well for Home Bancorp's prospects of growing its dividend payments in the future.

We Really Like Home Bancorp's Dividend

Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. Distributions are quite easily covered by earnings, which are also being converted to cash flows. 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. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. As an example, we've identified 1 warning sign for Home Bancorp that you should be aware of before investing. If you are a dividend investor, you might also want to look at our curated list of high yield 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.