Horizon Bancorp's (NASDAQ:HBNC) Dividend Will Be Increased To US$0.15

By
Simply Wall St
Published
September 24, 2021
NasdaqGS:HBNC
Source: Shutterstock

Horizon Bancorp, Inc.'s (NASDAQ:HBNC) dividend will be increasing to US$0.15 on 22nd of October. This makes the dividend yield 3.0%, which is above the industry average.

View our latest analysis for Horizon Bancorp

Horizon Bancorp's Payment Has Solid Earnings Coverage

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. However, Horizon Bancorp's earnings easily cover the dividend. This means that most of its earnings are being retained to grow the business.

Over the next year, EPS is forecast to fall by 1.9%. If the dividend continues along recent trends, we estimate the payout ratio could be 32%, which we consider to be quite comfortable, with most of the company's earnings left over to grow the business in the future.

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NasdaqGS:HBNC Historic Dividend September 25th 2021

Horizon Bancorp Has A Solid Track Record

The company has an extended history of paying stable dividends. The dividend has gone from US$0.13 in 2011 to the most recent annual payment of US$0.60. This means that it has been growing its distributions at 16% per annum over that time. It is good to see that there has been strong dividend growth, and that there haven't been any cuts for a long time.

The Dividend Looks Likely To Grow

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. It's encouraging to see Horizon Bancorp has been growing its earnings per share at 19% a year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for Horizon Bancorp's prospects of growing its dividend payments in the future.

We Really Like Horizon 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. The distributions are easily covered by earnings, and there is plenty of cash being generated as well. However, it is worth noting that the earnings are expected to fall over the next year, which may not change the long term outlook, but could affect the dividend payment in the next 12 months. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. However, there are other things to consider for investors when analysing stock performance. Earnings growth generally bodes well for the future value of company dividend payments. See if the 5 Horizon Bancorp analysts we track are forecasting continued growth with our free report on analyst estimates for the company. Looking for more high-yielding dividend ideas? Try our curated list of strong dividend payers.

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