MidWestOne Financial Group (NASDAQ:MOFG) Will Pay 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 15th of December. This makes the dividend yield 4.9%, which will augment investor returns quite nicely.

View our latest analysis for MidWestOne Financial Group

MidWestOne Financial Group's Earnings Will Easily Cover The Distributions

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained.

MidWestOne Financial Group has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. Based on MidWestOne Financial Group's last earnings report, the payout ratio is at a decent 44%, meaning that the company is able to pay out its dividend with a bit of room to spare.

Over the next 3 years, EPS is forecast to expand by 74.3%. Analysts forecast the future payout ratio could be 37% over the same time horizon, which is a number we think the company can maintain.

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. Since 2013, the annual payment back then was $0.50, compared to the most recent full-year payment of $0.97. This means that it has been growing its distributions at 6.9% per annum over that time. Dividends have grown at a reasonable rate over this period, and without any major cuts in the payment over time, we think this is an attractive combination as it provides a nice boost to shareholder returns.

The Dividend's Growth Prospects Are Limited

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. However, MidWestOne Financial Group has only grown its earnings per share at 4.7% per annum over the past five years. MidWestOne Financial Group is struggling to find viable investments, so it is returning more to shareholders. This isn't necessarily bad, but we wouldn't expect rapid dividend growth in the future.

We Really Like MidWestOne Financial Group's Dividend

Overall, we like to see the dividend staying consistent, and we think MidWestOne Financial Group might even raise payments in the future. Earnings are easily covering distributions, and the company is generating plenty of cash. 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. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing 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. 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.