MidWestOne Financial Group (NASDAQ:MOFG) Has Announced A Dividend Of $0.2425

The board of MidWestOne Financial Group, Inc. (NASDAQ:MOFG) has announced that it will pay a dividend of $0.2425 per share on the 17th of June. The dividend yield will be 4.7% based on this payment which is still above the industry average.

See our latest analysis for MidWestOne Financial Group

MidWestOne Financial Group's Payment Expected To Have Solid Earnings Coverage

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable.

MidWestOne Financial Group has a long history of paying out dividends, with its current track record at a minimum of 10 years. Past distributions do not necessarily guarantee future ones, but MidWestOne Financial Group's payout ratio of 67% is a good sign as this means that earnings decently cover dividends.

Over the next year, EPS is forecast to expand by 37.0%. If the dividend continues along recent trends, we estimate the future payout ratio will be 52%, which is in the range that makes us comfortable with the sustainability of the dividend.

MidWestOne Financial Group Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. Since 2014, the dividend has gone from $0.50 total annually to $0.97. This works out to be a compound annual growth rate (CAGR) of approximately 6.9% a year over that time. The growth of the dividend has been pretty reliable, so we think this can offer investors some nice additional income in their portfolio.

Dividend Growth Potential Is Shaky

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. However, things aren't all that rosy. MidWestOne Financial Group's EPS has fallen by approximately 10% per year during the past five years. A sharp decline in earnings per share is not great from from a dividend perspective. Even conservative payout ratios can come under pressure if earnings fall far enough. Over the next year, however, earnings are actually predicted to rise, but we would still be cautious until a track record of earnings growth can be built.

In Summary

Overall, we think MidWestOne Financial Group is a solid choice as a dividend stock, even though the dividend wasn't raised this year. While the payments look sustainable for now, earnings have been shrinking so the dividend could come under pressure in the future. This looks like it could be a good dividend stock going forward, but we would note that the payout ratio has been at higher levels in the past so it could happen again.

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. Taking the debate a bit further, we've identified 1 warning sign for MidWestOne Financial Group that investors need to be conscious of moving forward. Is MidWestOne Financial Group not quite the opportunity you were looking for? Why not check out our selection of top 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.