MidWestOne Financial Group (NASDAQ:MOFG) Is Paying Out A Larger Dividend Than Last Year

MidWestOne Financial Group, Inc. (NASDAQ:MOFG) has announced that it will be increasing its dividend from last year's comparable payment on the 15th of March to $0.2425. This takes the annual payment to 3.1% of the current stock price, which is about average for the industry.

See our latest analysis for MidWestOne Financial Group

MidWestOne Financial Group's Earnings Will Easily Cover The Distributions

While it is always good to see a solid dividend yield, we should also consider whether the payment is feasible.

Having distributed dividends for at least 10 years, MidWestOne Financial Group has a long history of paying out a part of its earnings to shareholders. While past records don't necessarily translate into future results, the company's payout ratio of 24% also shows that MidWestOne Financial Group is able to comfortably pay dividends.

EPS is set to fall by 14.9% over the next 3 years. Fortunately, analysts forecast the future payout ratio to be 29% over the same time horizon, 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 an extended history of paying stable dividends. Since 2013, the annual payment back then was $0.34, compared to the most recent full-year payment of $0.97. This means that it has been growing its distributions at 11% per annum over that time. So, dividends have been growing pretty quickly, and even more impressively, they haven't experienced any notable falls during this period.

The Dividend Looks Likely To Grow

Investors could be attracted to the stock based on the quality of its payment history. We are encouraged to see that MidWestOne Financial Group has grown earnings per share at 20% per year over the past five years. Earnings have been growing rapidly, and with a low payout ratio we think that the company could turn out to be a great dividend stock.

We Really Like MidWestOne Financial Group's Dividend

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. The company is generating plenty of cash, and the earnings also quite easily cover the distributions. If earnings do fall over the next 12 months, the dividend could be buffeted a little bit, but we don't think it should cause too much of a problem in the long term. All of these factors considered, we think this has solid potential as a dividend stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For example, we've picked out 1 warning sign for MidWestOne Financial Group that investors should know about before committing capital to this stock. 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.