Lakeland Financial (NASDAQ:LKFN) Is Paying Out A Larger Dividend Than Last Year

Lakeland Financial Corporation (NASDAQ:LKFN) will increase its dividend from last year's comparable payment on the 7th of August to $0.46. Based on this payment, the dividend yield for the company will be 3.6%, which is fairly typical for the industry.

Check out our latest analysis for Lakeland Financial

Lakeland Financial's Payment Expected To Have Solid Earnings Coverage

Unless the payments are sustainable, the dividend yield doesn't mean too much.

Having distributed dividends for at least 10 years, Lakeland Financial has a long history of paying out a part of its earnings to shareholders. Past distributions do not necessarily guarantee future ones, but Lakeland Financial's payout ratio of 42% is a good sign as this means that earnings decently cover dividends.

EPS is set to fall by 8.7% over the next 12 months. But assuming the dividend continues along recent trends, we believe the future payout ratio could be 53%, which we are pretty comfortable with and we think would be feasible on an earnings basis.

Lakeland Financial Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2013, the dividend has gone from $0.453 total annually to $1.84. This means that it has been growing its distributions at 15% 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 Looks Likely To Grow

The company's investors will be pleased to have been receiving dividend income for some time. Lakeland Financial has seen EPS rising for the last five years, at 11% per annum. Earnings are on the uptrend, and it is only paying a small portion of those earnings to shareholders.

Lakeland Financial Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that Lakeland Financial is a strong income stock thanks to its track record and growing earnings. The company is generating plenty of cash, and the earnings also quite easily cover the distributions. 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.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For instance, we've picked out 1 warning sign for Lakeland Financial that investors should take into consideration. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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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.