HBT Financial (NASDAQ:HBT) Has Announced That It Will Be Increasing Its Dividend To $0.19

HBT Financial, Inc. (NASDAQ:HBT) will increase its dividend from last year's comparable payment on the 13th of February to $0.19. This takes the annual payment to 3.8% of the current stock price, which is about average for the industry.

See our latest analysis for HBT Financial

HBT Financial's Payment Expected To Have Solid Earnings Coverage

While it is always good to see a solid dividend yield, we should also consider whether the payment is feasible.

Having paid out dividends for only 4 years, HBT Financial does not have much of a history being a dividend paying company. Diving into the company's earnings report, the payout ratio is set at 33%, which is a decent ratio of dividend payout to earnings, and may sustain future dividends if the company stays at its current trend.

Looking forward, EPS is forecast to rise by 6.6% over the next 3 years. The future payout ratio could be 35% over that time period, according to analyst estimates, which is a good look for the future of the dividend.

HBT Financial Is Still Building Its Track Record

The dividend hasn't seen any major cuts in the past, but the company has only been paying a dividend for 4 years, which isn't that long in the grand scheme of things. The dividend has gone from an annual total of $0.60 in 2020 to the most recent total annual payment of $0.76. This implies that the company grew its distributions at a yearly rate of about 6.1% over that duration. Investors will likely want to see a longer track record of growth before making decision to add this to their income portfolio.

The Dividend Has Limited Growth Potential

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Unfortunately things aren't as good as they seem. Over the past five years, it looks as though HBT Financial's EPS has declined at around 10% a year. Dividend payments are likely to come under some pressure unless EPS can pull out of the nosedive it is in. Over the next year, however, earnings are actually predicted to rise, but we would still be cautious until a track record of earnings growth can be built.

An additional note is that the company has been raising capital by issuing stock equal to 10% of shares outstanding in the last 12 months. Regularly doing this can be detrimental - it's hard to grow dividends per share when new shares are regularly being created.

In Summary

Overall, we always like to see the dividend being raised, but we don't think HBT Financial will make a great income stock. While HBT Financial is earning enough to cover the dividend, we are generally unimpressed with its future prospects. We don't think HBT Financial is a great stock to add to your portfolio if income is your focus.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. As an example, we've identified 2 warning signs for HBT Financial 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.