MidWestOne Financial Group (NASDAQ:MOFG) Is Increasing Its Dividend To $0.2425

MidWestOne Financial Group, Inc.'s (NASDAQ:MOFG) dividend will be increasing from last year's payment of the same period to $0.2425 on 15th of September. Based on this payment, the dividend yield for the company will be 4.0%, which is fairly typical for the industry.

See our latest analysis for MidWestOne Financial Group

MidWestOne Financial Group's Earnings Will Easily Cover The Distributions

We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue.

MidWestOne Financial Group has a long history of paying out dividends, with its current track record at a minimum of 10 years. Based on MidWestOne Financial Group's last earnings report, the payout ratio is at a decent 35%, meaning that the company is able to pay out its dividend with a bit of room to spare.

Looking forward, earnings per share is forecast to fall by 0.4% over the next year. But assuming the dividend continues along recent trends, we believe the future payout ratio could be 38%, which we are pretty comfortable with and we think would be feasible on an earnings basis.

MidWestOne Financial Group Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. Since 2013, the annual payment back then was $0.38, compared to the most recent full-year payment of $0.97. This implies that the company grew its distributions at a yearly rate of about 9.8% over that duration. Companies like this can be very valuable over the long term, if the decent rate of growth can be maintained.

The Dividend Looks Likely To Grow

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. MidWestOne Financial Group has impressed us by growing EPS at 10% per year over the past five years. A low payout ratio and decent growth suggests that the company is reinvesting well, and it also has plenty of room to increase the dividend over time.

We Really Like MidWestOne Financial Group's Dividend

Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. The company is generating plenty of cash, and the earnings also quite easily cover the distributions. 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.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. However, there are other things to consider for investors when analysing stock performance. As an example, we've identified 1 warning sign for MidWestOne Financial Group that you should be aware of before investing. 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.