Midland States Bancorp's (NASDAQ:MSBI) Dividend Will Be $0.31

The board of Midland States Bancorp, Inc. (NASDAQ:MSBI) has announced that it will pay a dividend on the 21st of February, with investors receiving $0.31 per share. This means the annual payment is 6.3% of the current stock price, which is above the average for the industry.

Check out our latest analysis for Midland States Bancorp

Midland States Bancorp's Payment Expected To Have Solid Earnings Coverage

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. Past distributions unfortunately do not guarantee future ones, and Midland States Bancorp's last earnings report actually showed that the company went over its net earnings in its total dividend distribution. This is an alarming sign for the sustainability of its dividends, as it may mean that Midland States Bancorpis pulling cash from elsewhere to keep its shareholders happy.

Analysts expect a massive rise in earnings per share in the next 3 years. They also estimate that the future payout ratio will be 46% in the same time horizon, so there isn't too much pressure on the dividend.

Midland States Bancorp Is Still Building Its Track Record

It is great to see that Midland States Bancorp has been paying a stable dividend for a number of years now, however we want to be a bit cautious about whether this will remain true through a full economic cycle. Since 2016, the annual payment back then was $0.72, compared to the most recent full-year payment of $1.24. This works out to be a compound annual growth rate (CAGR) of approximately 6.2% a year over that time. Midland States Bancorp has a nice track record of dividend growth but we would wait until we see a longer track record before getting too confident.

Dividend Growth May Be Hard To Achieve

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. However, Midland States Bancorp has only grown its earnings per share at 3.7% per annum over the past five years. Midland States Bancorp isn't actually turning a profit, which makes it much harder for us to see how they can grow dividends.

In Summary

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Midland States Bancorp's payments, as there could be some issues with sustaining them into the future. The track record isn't great, and the payments are a bit high to be considered sustainable. We would probably look elsewhere for an income investment.

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. As an example, we've identified 1 warning sign for Midland States 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.