Mid Penn Bancorp's (NASDAQ:MPB) Upcoming Dividend Will Be Larger Than Last Year's

Mid Penn Bancorp, Inc.'s (NASDAQ:MPB) dividend will be increasing from last year's payment of the same period to $0.22 on 24th of November. This makes the dividend yield about the same as the industry average at 3.0%.

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

Unless the payments are sustainable, the dividend yield doesn't mean too much.

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 34%, 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 92.3%. The future payout ratio could be 21% over that time period, according to analyst estimates, which is a good look for the future of the dividend.

See our latest analysis for Mid Penn Bancorp

Dividend Volatility

While the company has been paying a dividend for a long time, it has cut the dividend at least once in the last 10 years. The dividend has gone from an annual total of $0.40 in 2015 to the most recent total annual payment of $0.88. This works out to be a compound annual growth rate (CAGR) of approximately 8.2% a year over that time. We have seen cuts in the past, so while the growth looks promising we would be a little bit cautious about its track record.

Mid Penn Bancorp May Find It Hard To Grow The Dividend

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 not great to see that Mid Penn Bancorp's earnings per share has fallen at approximately 3.2% per year over the past five years. If earnings continue declining, the company may have to make the difficult choice of reducing the dividend or even stopping it completely - the opposite of dividend growth. However, the next year is actually looking up, with earnings set to rise. We would just wait until it becomes a pattern before getting too excited.

We should note that Mid Penn Bancorp has issued stock equal to 39% of shares outstanding. Regularly doing this can be detrimental - it's hard to grow dividends per share when new shares are regularly being created.

Our Thoughts On Mid Penn Bancorp's Dividend

In summary, while it's always good to see the dividend being raised, we don't think Mid Penn Bancorp's payments are rock solid. While Mid Penn Bancorp is earning enough to cover the dividend, we are generally unimpressed with its future prospects. This company is not in the top tier of income providing stocks.

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. Case in point: We've spotted 2 warning signs for Mid Penn Bancorp (of which 1 is significant!) you should know about. 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.