Midland States Bancorp (NASDAQ:MSBI) Is Paying Out A Larger Dividend Than Last Year

Midland States Bancorp, Inc. (NASDAQ:MSBI) will increase its dividend on the 24th of February to $0.30, which is 3.4% higher than last year's payment from the same period of $0.29. This takes the dividend yield to 4.4%, which shareholders will be pleased with.

View our latest analysis for Midland States Bancorp

Midland States Bancorp's Dividend Forecasted To Be Well Covered By Earnings

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

Midland States Bancorp has established itself as a dividend paying company, given its 6-year history of distributing earnings to shareholders. Taking data from its last earnings report, calculating for the company's payout ratio of 29%shows that Midland States Bancorp would be able to pay its last dividend without pressure on the balance sheet.

Over the next 3 years, EPS is forecast to fall by 15.0%. However, as estimated by analysts, the future payout ratio could be 34% over the same time period, which we think the company can easily maintain.

Midland States Bancorp Is Still Building Its Track Record

Even though the company has been paying a consistent dividend for a while, we would like to see a few more years before we feel comfortable relying on it. The annual payment during the last 6 years was $0.72 in 2017, and the most recent fiscal year payment was $1.16. This works out to be a compound annual growth rate (CAGR) of approximately 8.3% a year over that time. Investors will likely want to see a longer track record of growth before making decision to add this to their income portfolio.

The Dividend Looks Likely To Grow

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Midland States Bancorp has impressed us by growing EPS at 21% per year over the past five years. Earnings per share is growing at a solid clip, and the payout ratio is low which we think is an ideal combination in a dividend stock as the company can quite easily raise the dividend in the future.

Midland States Bancorp Looks Like A Great Dividend Stock

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. The distributions are easily covered by earnings, and there is plenty of cash being generated as well. 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. Taking this all into consideration, this looks like it could be a good dividend opportunity.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. However, there are other things to consider for investors when analysing stock performance. Just as an example, we've come across 2 warning signs for Midland States Bancorp you should be aware of, and 1 of them doesn't sit too well with us. Is Midland States Bancorp not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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