Investar Holding (NASDAQ:ISTR) Is Paying Out A Dividend Of $0.105

Investar Holding Corporation (NASDAQ:ISTR) has announced that it will pay a dividend of $0.105 per share on the 31st of January. The dividend yield is 1.9% based on this payment, which is a little bit low compared to the other companies in the industry.

See our latest analysis for Investar Holding

Investar Holding's Dividend Forecasted To Be Well Covered By Earnings

The dividend yield is a little bit low, but sustainability of the payments is also an important part of evaluating an income stock.

Having distributed dividends for at least 10 years, Investar Holding has a long history of paying out a part of its earnings to shareholders. While past data isn't a guarantee for the future, Investar Holding's latest earnings report puts its payout ratio at 22%, showing that the company can pay out its dividends comfortably.

The next 3 years are set to see EPS grow by 32.5%. Analysts forecast the future payout ratio could be 18% over the same time horizon, which is a number we think the company can maintain.

Investar Holding 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 $0.0272 in 2014 to the most recent total annual payment of $0.42. This means that it has been growing its distributions at 31% per annum over that time. We can see that payments have shown some very nice upward momentum without faltering, which provides some reassurance that future payments will also be reliable.

The Dividend's Growth Prospects Are Limited

Investors could be attracted to the stock based on the quality of its payment history. However, Investar Holding's EPS was effectively flat over the past five years, which could stop the company from paying more every year. If Investar Holding is struggling to find viable investments, it always has the option to increase its payout ratio to pay more to shareholders.

Investar Holding Looks Like A Great Dividend Stock

Overall, we like to see the dividend staying consistent, and we think Investar Holding might even raise payments in the future. 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. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Are management backing themselves to deliver performance? Check their shareholdings in Investar Holding in our latest insider ownership analysis. If you are a dividend investor, you might also want to look at our curated list of high yield 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.