Hawthorn Bancshares (NASDAQ:HWBK) Will Pay A Dividend Of $0.17

Hawthorn Bancshares, Inc. (NASDAQ:HWBK) has announced that it will pay a dividend of $0.17 per share on the 1st of July. This means the dividend yield will be fairly typical at 3.8%.

View our latest analysis for Hawthorn Bancshares

Hawthorn Bancshares' Payment Expected To Have Solid Earnings Coverage

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. Taking data from its last earnings report, calculating for the company's payout ratio shows 26%, which means that Hawthorn Bancshares would be able to pay its last dividend without pressure on the balance sheet.

Looking forward, earnings per share could rise by 39.8% over the next year if the trend from the last few years continues. If the dividend continues on this path, the future payout ratio could be 22% by next year, which we think can be pretty sustainable going forward.

Hawthorn Bancshares Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. The dividend has gone from an annual total of $0.135 in 2013 to the most recent total annual payment of $0.68. This implies that the company grew its distributions at a yearly rate of about 18% over that duration. Rapidly growing dividends for a long time is a very valuable feature for an income stock.

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. Hawthorn Bancshares has impressed us by growing EPS at 40% per year over the past five years. 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.

Hawthorn Bancshares Looks Like A Great Dividend Stock

Overall, we like to see the dividend staying consistent, and we think Hawthorn Bancshares might even raise payments in the future. Distributions are quite easily covered by earnings, which are also being converted to cash flows. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Are management backing themselves to deliver performance? Check their shareholdings in Hawthorn Bancshares in our latest insider ownership analysis. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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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.