Heartland Financial USA (NASDAQ:HTLF) Is Paying Out A Larger Dividend Than Last Year

Heartland Financial USA, Inc. (NASDAQ:HTLF) will increase its dividend from last year's comparable payment on the 26th of May to $0.30. This makes the dividend yield about the same as the industry average at 3.3%.

View our latest analysis for Heartland Financial USA

Heartland Financial USA's Payment Expected To Have Solid Earnings Coverage

We like a dividend to be consistent over the long term, so checking whether it is sustainable is important.

Heartland Financial USA has a long history of paying out dividends, with its current track record at a minimum of 10 years. Using data from its latest earnings report, Heartland Financial USA's payout ratio sits at 23%, an extremely comfortable number that shows that it can pay its dividend.

Over the next 3 years, EPS is forecast to expand by 8.7%. Analysts forecast the future payout ratio could be 25% over the same time horizon, which is a number we think the company can maintain.

Dividend Volatility

While the company has been paying a dividend for a long time, it has cut the dividend at least once in the last 10 years. The dividend has gone from an annual total of $0.40 in 2013 to the most recent total annual payment of $1.20. This implies that the company grew its distributions at a yearly rate of about 12% over that duration. Heartland Financial USA has grown distributions at a rapid rate despite cutting the dividend at least once in the past. Companies that cut once often cut again, so we would be cautious about buying this stock solely for the dividend income.

The Dividend Looks Likely To Grow

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. It's encouraging to see that Heartland Financial USA has been growing its earnings per share at 12% a year over the past five years. A low payout ratio and decent growth suggests that the company is reinvesting well, and it also has plenty of room to increase the dividend over time.

We Really Like Heartland Financial USA's Dividend

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. Earnings are easily covering distributions, and the company is generating plenty of cash. 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. For instance, we've picked out 2 warning signs for Heartland Financial USA that investors should take into consideration. Is Heartland Financial USA 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.