HomeTrust Bancshares (NASDAQ:HTBI) Is Paying Out A Larger Dividend Than Last Year

HomeTrust Bancshares, Inc. (NASDAQ:HTBI) has announced that it will be increasing its dividend from last year's comparable payment on the 1st of December to $0.10. Although the dividend is now higher, the yield is only 1.7%, which is below the industry average.

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HomeTrust Bancshares' Dividend Forecasted To Be Well Covered By Earnings

While yield is important, another factor to consider about a company's dividend is whether the current payout levels are feasible.

HomeTrust Bancshares is just starting to establish itself as being able to pay dividends to shareholders, given its short 4-year history of distributing earnings. Despite the company's shorter dividend history however, calculating for its payout ratio of 16% shows that HomeTrust Bancshares is able to comfortably pay dividends.

Over the next 3 years, EPS is forecast to expand by 29.3%. The future payout ratio could be 14% over that time period, according to analyst estimates, which is a good look for the future of the dividend.

HomeTrust Bancshares Doesn't Have A Long Payment History

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. Since 2018, the dividend has gone from $0.24 total annually to $0.40. This implies that the company grew its distributions at a yearly rate of about 14% over that duration. It is always nice to see strong dividend growth, but with such a short payment history we wouldn't be inclined to rely on it until a longer track record can be developed.

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. HomeTrust Bancshares has seen EPS rising for the last five years, at 23% per annum. Earnings per share is growing at a solid clip, and the payout ratio is low which we think is an ideal combination in a dividend stock as the company can quite easily raise the dividend in the future.

HomeTrust Bancshares Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that HomeTrust Bancshares is a strong income stock thanks to its track record and growing earnings. 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.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. As an example, we've identified 1 warning sign for HomeTrust Bancshares that you should be aware of before investing. Is HomeTrust Bancshares 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.