LCNB's (NASDAQ:LCNB) Shareholders Will Receive A Bigger Dividend Than Last Year

LCNB Corp. (NASDAQ:LCNB) has announced that it will be increasing its dividend from last year's comparable payment on the 15th of March to $0.21. This takes the dividend yield to 4.6%, which shareholders will be pleased with.

See our latest analysis for LCNB

LCNB's Earnings Will Easily Cover The Distributions

If the payments aren't sustainable, a high yield for a few years won't matter that much.

Having distributed dividends for at least 10 years, LCNB has a long history of paying out a part of its earnings to shareholders. Based on LCNB's last earnings report, the payout ratio is at a decent 42%, meaning that the company is able to pay out its dividend with a bit of room to spare.

If the trend of the last few years continues, EPS will grow by 8.7% over the next 12 months. If the dividend continues on this path, the future payout ratio could be 40% by next year, which we think can be pretty sustainable going forward.

LCNB Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. The annual payment during the last 10 years was $0.64 in 2013, and the most recent fiscal year payment was $0.84. This works out to be a compound annual growth rate (CAGR) of approximately 2.8% a year over that time. Dividends have grown relatively slowly, which is not great, but some investors may value the relative consistency of the dividend.

We Could See LCNB's Dividend Growing

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. LCNB has seen EPS rising for the last five years, at 8.7% per annum. Since earnings per share is growing at an acceptable rate, and the payout policy is balanced, we think the company is positioning itself well to grow earnings and dividends in the future.

LCNB Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that LCNB is a strong income stock thanks to its track record and growing earnings. Earnings are easily covering distributions, and the company is generating plenty of cash. All in all, this checks a lot of the boxes we look for when choosing an income stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. You can also discover whether shareholders are aligned with insider interests by checking our visualisation of insider shareholdings and trades in LCNB stock. 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.