SB Financial Group (NASDAQ:SBFG) Has Re-Affirmed Its Dividend Of US$0.12

The board of SB Financial Group, Inc. (NASDAQ:SBFG) has announced that it will pay a dividend of US$0.12 per share on the 27th of May. This payment means that the dividend yield will be 2.4%, which is around the industry average.

See our latest analysis for SB Financial Group

SB Financial Group's Payment Has Solid Earnings Coverage

While it is always good to see a solid dividend yield, we should also consider whether the payment is feasible. However, SB Financial Group's earnings easily cover the dividend. This means that most of its earnings are being retained to grow the business.

Over the next year, EPS is forecast to fall by 8.6%. Assuming the dividend continues along recent trends, we believe the payout ratio could be 29%, which we are pretty comfortable with and we think is feasible on an earnings basis.

SB Financial Group Doesn't Have A Long Payment History

The dividend's track record has been pretty solid, but with only 9 years of history we want to see a few more years of history before making any solid conclusions. Since 2013, the dividend has gone from US$0.095 to US$0.44. This means that it has been growing its distributions at 18% per annum over that time. The dividend has been growing rapidly, however with such a short payment history we can't know for sure if payment can continue to grow over the long term, so caution may be warranted.

The Dividend's Growth Prospects Are Limited

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. However, SB Financial Group has only grown its earnings per share at 4.2% per annum over the past five years. While growth may be thin on the ground, SB Financial Group could always pay out a higher proportion of earnings to increase shareholder returns.

Our Thoughts On SB Financial Group's Dividend

In summary, we are pleased with the dividend remaining consistent, and we think there is a good chance of this continuing in the future. While the payout ratios are a good sign, we are less enthusiastic about the company's dividend record. The payment isn't stellar, but it could make a decent addition to a dividend portfolio.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Just as an example, we've come across 3 warning signs for SB Financial Group you should be aware of, and 1 of them is potentially serious. Is SB Financial Group not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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