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

Midland States Bancorp, Inc.'s (NASDAQ:MSBI) periodic dividend will be increasing on the 22nd of August to $0.32, with investors receiving 3.2% more than last year's $0.31. This will take the dividend yield to an attractive 7.1%, providing a nice boost to shareholder returns.

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Midland States Bancorp's Earnings Will Easily Cover The Distributions

A big dividend yield for a few years doesn't mean much if it can't be sustained.

Having paid out dividends for 9 years, Midland States Bancorp has a good history of paying out a part of its earnings to shareholders. Taking data from its last earnings report, calculating for the company's payout ratio of 77%shows that Midland States Bancorp would be able to pay its last dividend without pressure on the balance sheet.

The next year is set to see EPS grow by 42.3%. Under the assumption that the dividend will continue along recent trends, we think the future payout ratio could be 59% which would be quite comfortable going to take the dividend forward.

Check out our latest analysis for Midland States Bancorp

Midland States Bancorp Doesn't Have A Long Payment History

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. Since 2016, the annual payment back then was $0.72, compared to the most recent full-year payment of $1.24. This implies that the company grew its distributions at a yearly rate of about 6.2% over that duration. Midland States Bancorp has been growing its dividend at a decent rate, and the payments have been stable. However, the payment history is very short, so there is no evidence yet that the dividend can be sustained over a full economic cycle.

Midland States Bancorp May Find It Hard To Grow The Dividend

The company's investors will be pleased to have been receiving dividend income for some time. Midland States Bancorp hasn't seen much change in its earnings per share over the last five years. Midland States Bancorp's earnings per share has barely grown, which is not ideal - perhaps this is why the company pays out the majority of its earnings to shareholders. This isn't the end of the world, but for investors looking for strong dividend growth they may want to look elsewhere.

In Summary

In summary, while it's always good to see the dividend being raised, we don't think Midland States Bancorp's payments are rock solid. The track record isn't great, and the payments are a bit high to be considered sustainable. We would be a touch cautious of relying on this stock primarily for the dividend income.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Earnings growth generally bodes well for the future value of company dividend payments. See if the 4 Midland States Bancorp analysts we track are forecasting continued growth with our free report on analyst estimates for the company. 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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