Independent Bank (NASDAQ:INDB) Is Increasing Its Dividend To $0.57

Independent Bank Corp. (NASDAQ:INDB) has announced that it will be increasing its periodic dividend on the 5th of April to $0.57, which will be 3.6% higher than last year's comparable payment amount of $0.55. This makes the dividend yield 4.3%, which is above the industry average.

View our latest analysis for Independent Bank

Independent Bank's Dividend Forecasted To Be Well Covered By Earnings

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable.

Independent Bank has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. Based on Independent Bank's last earnings report, the payout ratio is at a decent 41%, meaning that the company is able to pay out its dividend with a bit of room to spare.

EPS is set to fall by 14.8% over the next 3 years. Despite that, analysts estimate the future payout ratio could be 46% over the same time period, which is in a pretty comfortable range.

Independent Bank 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 2014, the annual payment back then was $0.88, compared to the most recent full-year payment of $2.20. This implies that the company grew its distributions at a yearly rate of about 9.6% over that duration. Companies like this can be very valuable over the long term, if the decent rate of growth can be maintained.

Independent Bank Could Grow Its Dividend

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. We are encouraged to see that Independent Bank has grown earnings per share at 5.1% per year over the past five years. Shareholders are getting plenty of the earnings returned to them, which combined with strong growth makes this quite appealing.

Independent Bank Looks Like A Great Dividend Stock

Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. The company is generating plenty of cash, and the earnings also quite easily cover the distributions. We should point out that the earnings are expected to fall over the next 12 months, which won't be a problem if this doesn't become a trend, but could cause some turbulence in the next year. All of these factors considered, we think this has solid potential as a dividend 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 example, we've picked out 1 warning sign for Independent Bank that investors should know about before committing capital to this stock. Is Independent Bank 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.