Hawthorn Bancshares' (NASDAQ:HWBK) Dividend Will Be $0.17

Hawthorn Bancshares, Inc. (NASDAQ:HWBK) will pay a dividend of $0.17 on the 1st of January. This means the dividend yield will be fairly typical at 3.2%.

View our latest analysis for Hawthorn Bancshares

Hawthorn Bancshares' Earnings Will Easily Cover The Distributions

We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue.

Having distributed dividends for at least 10 years, Hawthorn Bancshares has a long history of paying out a part of its earnings to shareholders. Based on Hawthorn Bancshares' last earnings report, the payout ratio is at a decent 35%, meaning that the company is able to pay out its dividend with a bit of room to spare.

If the trend of the last few years continues, EPS will grow by 19.0% over the next 12 months. If the dividend continues on this path, the future payout ratio could be 36% by next year, which we think can be pretty sustainable going forward.

Hawthorn Bancshares Has A Solid Track Record

The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. The dividend has gone from an annual total of $0.13 in 2013 to the most recent total annual payment of $0.68. This works out to be a compound annual growth rate (CAGR) of approximately 18% a year 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

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. We are encouraged to see that Hawthorn Bancshares has grown earnings per share at 19% per year over the past five years. Hawthorn Bancshares definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

Hawthorn Bancshares Looks Like A Great Dividend Stock

Overall, we think that this is a great income investment, and we think that maintaining the dividend this year may have been a conservative choice. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. All of these factors considered, we think this has solid potential as a dividend stock.

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. As an example, we've identified 1 warning sign for Hawthorn Bancshares that you should be aware of before investing. Is Hawthorn Bancshares not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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