SB Financial Group (NASDAQ:SBFG) Has Affirmed Its Dividend Of $0.125

The board of SB Financial Group, Inc. (NASDAQ:SBFG) has announced that it will pay a dividend on the 25th of November, with investors receiving $0.125 per share. This payment means that the dividend yield will be 2.8%, which is around the industry average.

Our analysis indicates that SBFG is potentially undervalued!

SB Financial Group's Earnings Will Easily Cover The Distributions

While it is always good to see a solid dividend yield, we should also consider whether the payment is feasible.

SB Financial Group has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. Using data from its latest earnings report, SB Financial Group's payout ratio sits at 25%, an extremely comfortable number that shows that it can pay its dividend.

If the trend of the last few years continues, EPS will grow by 3.0% over the next 12 months. If the dividend continues along recent trends, we estimate the future payout ratio will be 28%, which is in the range that makes us comfortable with the sustainability of the dividend.

SB Financial Group Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. Since 2012, the annual payment back then was $0.0952, compared to the most recent full-year payment of $0.48. This means that it has been growing its distributions at 18% per annum over that time. It is good to see that there has been strong dividend growth, and that there haven't been any cuts for a long time.

Dividend Growth May Be Hard To Achieve

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Earnings has been rising at 3.0% per annum over the last five years, which admittedly is a bit slow. If SB Financial Group is struggling to find viable investments, it always has the option to increase its payout ratio to pay more to shareholders.

SB Financial Group Looks Like A Great Dividend Stock

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. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. You can also discover whether shareholders are aligned with insider interests by checking our visualisation of insider shareholdings and trades in SB Financial Group stock. 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.