Investar Holding (NASDAQ:ISTR) Is Due To Pay A Dividend Of $0.10

Investar Holding Corporation (NASDAQ:ISTR) will pay a dividend of $0.10 on the 31st of January. This means the dividend yield will be fairly typical at 2.7%.

While the dividend yield is important for income investors, it is also important to consider any large share price moves, as this will generally outweigh any gains from distributions. Investors will be pleased to see that Investar Holding's stock price has increased by 33% in the last 3 months, which is good for shareholders and can also explain a decrease in the dividend yield.

Check out our latest analysis for Investar Holding

Investar Holding's Payment Expected To Have Solid Earnings Coverage

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

Investar Holding has a good history of paying out dividends, with its current track record at 9 years. While past data isn't a guarantee for the future, Investar Holding's latest earnings report puts its payout ratio at 17%, showing that the company can pay out its dividends comfortably.

Looking forward, earnings per share is forecast to fall by 15.1% over the next 3 years. However, as estimated by analysts, the future payout ratio could be 23% over the same time period, which we think the company can easily maintain.

Investar Holding Is Still Building Its Track Record

Even though the company has been paying a consistent dividend for a while, we would like to see a few more years before we feel comfortable relying on it. Since 2014, the dividend has gone from $0.0272 total annually to $0.40. This implies that the company grew its distributions at a yearly rate of about 35% over that duration. It is always nice to see strong dividend growth, but with such a short payment history we wouldn't be inclined to rely on it until a longer track record can be developed.

The Dividend Looks Likely To Grow

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 Investar Holding has grown earnings per share at 12% per year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for Investar Holding's prospects of growing its dividend payments in the future.

Investar Holding Looks Like A Great Dividend Stock

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 earnings easily cover the company's distributions, and the company is generating plenty of cash. However, it is worth noting that the earnings are expected to fall over the next year, which may not change the long term outlook, but could affect the dividend payment in the next 12 months. Taking this all into consideration, this looks like it could be a good dividend opportunity.

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 identified 2 warning signs for Investar Holding (1 is a bit concerning!) that you should be aware of before investing. Is Investar Holding 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.