MidWestOne Financial Group (NASDAQ:MOFG) Has Affirmed Its Dividend Of US$0.23

MidWestOne Financial Group, Inc. (NASDAQ:MOFG) will pay a dividend of US$0.23 on the 15th of September. The dividend yield will be 3.2% based on this payment which is still above the industry average.

See our latest analysis for MidWestOne Financial Group

MidWestOne Financial Group's Dividend Is Well Covered By Earnings

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. Based on the last payment, MidWestOne Financial Group was paying only paying out a fraction of earnings, but the payment was a massive 1,974% of cash flows. A cash payout ratio this high could put the dividend under pressure and force the company to reduce it in the future if it were to run into tough times.

Looking forward, earnings per share is forecast to rise by 66.4% over the next year. If the dividend continues on this path, the payout ratio could be 26% by next year, which we think can be pretty sustainable going forward.

MidWestOne Financial Group 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 US$0.20 in 2011 to the most recent annual payment of US$0.90. This works out to be a compound annual growth rate (CAGR) of approximately 16% a year over that time. It is good to see that there has been strong dividend growth, and that there haven't been any cuts for a long time.

The Dividend's Growth Prospects Are Limited

Investors could be attracted to the stock based on the quality of its payment history. Unfortunately things aren't as good as they seem. Unfortunately, MidWestOne Financial Group's earnings per share has been essentially flat over the past five years, which means the dividend may not be increased each year.

In Summary

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about MidWestOne Financial Group's payments, as there could be some issues with sustaining them into the future. With cash flows lacking, it is difficult to see how the company can sustain a dividend payment. This company is not in the top tier of income providing stocks.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. However, there are other things to consider for investors when analysing stock performance. Just as an example, we've come across 2 warning signs for MidWestOne Financial Group you should be aware of, and 1 of them is significant. We have also put together a list of global stocks with a solid dividend.

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