Mid Penn Bancorp (NASDAQ:MPB) Will Pay A Dividend Of $0.20

Mid Penn Bancorp, Inc.'s (NASDAQ:MPB) investors are due to receive a payment of $0.20 per share on 20th of February. This means that the annual payment will be 3.5% of the current stock price, which is in line with the average for the industry.

See our latest analysis for Mid Penn Bancorp

Mid Penn Bancorp's Payment Expected To Have Solid Earnings Coverage

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

Mid Penn Bancorp has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. Based on Mid Penn Bancorp'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.

The next 3 years are set to see EPS grow by 53.8%. Analysts estimate the future payout ratio will be 26% over the same time period, which is in the range that makes us comfortable with the sustainability of the dividend.

Dividend Volatility

The company's dividend history has been marked by instability, with at least one cut in the last 10 years. The annual payment during the last 10 years was $0.20 in 2014, and the most recent fiscal year payment was $0.80. This means that it has been growing its distributions at 15% per annum over that time. Despite the rapid growth in the dividend over the past number of years, we have seen the payments go down the past as well, so that makes us cautious.

The Dividend Has Growth Potential

Given that the dividend has been cut in the past, we need to check if earnings are growing and if that might lead to stronger dividends in the future. It's encouraging to see that Mid Penn Bancorp has been growing its earnings per share at 8.7% a year over the past five years. Mid Penn Bancorp definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

We Really Like Mid Penn Bancorp's Dividend

Overall, we think that this is a great income investment, and we think that maintaining the dividend this year may have been a conservative choice. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All of these factors considered, we think this has solid potential as a dividend stock.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. As an example, we've identified 3 warning signs for Mid Penn Bancorp 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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