Hawthorn Bancshares (NASDAQ:HWBK) Has Affirmed Its Dividend Of $0.17

The board of Hawthorn Bancshares, Inc. (NASDAQ:HWBK) has announced that it will pay a dividend on the 1st of October, with investors receiving $0.17 per share. This means the dividend yield will be fairly typical at 3.7%.

Check out our latest analysis for Hawthorn Bancshares

Hawthorn Bancshares' Earnings Will Easily Cover The Distributions

We aren't too impressed by dividend yields unless they can be sustained over time.

Hawthorn Bancshares has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. Taking data from its last earnings report, calculating for the company's payout ratio shows 30%, which means that Hawthorn Bancshares would be able to pay its last dividend without pressure on the balance sheet.

If the trend of the last few years continues, EPS will grow by 29.7% over the next 12 months. Assuming the dividend continues along recent trends, we think the future payout ratio could be 28% by next year, which is in a pretty sustainable range.

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. Since 2013, the annual payment back then was $0.13, compared to the most recent full-year payment of $0.654. This implies that the company grew its distributions at a yearly rate of about 18% over that duration. So, dividends have been growing pretty quickly, and even more impressively, they haven't experienced any notable falls during this period.

The Dividend Looks Likely To Grow

The company's investors will be pleased to have been receiving dividend income for some time. Hawthorn Bancshares has seen EPS rising for the last five years, at 30% per annum. Rapid earnings growth and a low payout ratio suggest this company has been effectively reinvesting in its business. Should that continue, this company could have a bright future.

We Really Like Hawthorn Bancshares' Dividend

In summary, it is good to see that the dividend is staying consistent, and we don't think there is any reason to suspect this might change over the medium term. 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.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. However, there are other things to consider for investors when analysing stock performance. Now, if you want to look closer, it would be worth checking out our free research on Hawthorn Bancshares management tenure, salary, and performance. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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