Lakeland Financial (NASDAQ:LKFN) Has Announced That It Will Be Increasing Its Dividend To $0.50

The board of Lakeland Financial Corporation (NASDAQ:LKFN) has announced that it will be increasing its dividend by 4.2% on the 5th of February to $0.50, up from last year's comparable payment of $0.48. This takes the annual payment to 2.8% of the current stock price, which is about average for the industry.

See our latest analysis for Lakeland Financial

Lakeland Financial's Earnings Will Easily Cover The Distributions

Solid dividend yields are great, but they only really help us if the payment is sustainable.

Lakeland Financial has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. Based on Lakeland Financial's last earnings report, the payout ratio is at a decent 50%, meaning that the company is able to pay out its dividend with a bit of room to spare.

EPS is set to fall by 1.0% over the next 3 years. Despite that, analysts estimate the future payout ratio could be 52% over the same time period, which is in a pretty comfortable range.

Lakeland Financial Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. The annual payment during the last 10 years was $0.507 in 2015, and the most recent fiscal year payment was $1.92. This works out to be a compound annual growth rate (CAGR) of approximately 14% a year over that time. Rapidly growing dividends for a long time is a very valuable feature for an income stock.

Dividend Growth May Be Hard To Achieve

The company's investors will be pleased to have been receiving dividend income for some time. Earnings per share has been crawling upwards at 2.8% per year. Lakeland Financial is struggling to find viable investments, so it is returning more to shareholders. This isn't necessarily bad, but we wouldn't expect rapid dividend growth in the future.

We Really Like Lakeland Financial's Dividend

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. The earnings easily cover the company's distributions, and the company is generating plenty of cash. 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 in all, this checks a lot of the boxes we look for when choosing an income stock.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. As an example, we've identified 1 warning sign for Lakeland Financial that you should be aware of before investing. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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