Stock Yards Bancorp (NASDAQ:SYBT) Has Affirmed Its Dividend Of US$0.27

Stock Yards Bancorp, Inc.'s (NASDAQ:SYBT) investors are due to receive a payment of US$0.27 per share on 1st of July. This means the dividend yield will be fairly typical at 2.1%.

Check out our latest analysis for Stock Yards Bancorp

Stock Yards Bancorp's Dividend Is Well Covered By Earnings

We aren't too impressed by dividend yields unless they can be sustained over time. However, prior to this announcement, Stock Yards Bancorp's dividend was comfortably covered by both cash flow and earnings. This means that most of its earnings are being retained to grow the business.

Looking forward, earnings per share is forecast to fall by 3.3% over the next year. Assuming the dividend continues along recent trends, we believe the payout ratio could be 41%, which we are pretty comfortable with and we think is feasible on an earnings basis.

Stock Yards Bancorp Has A Solid Track Record

The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. Since 2011, the first annual payment was US$0.45, compared to the most recent full-year payment of US$1.08. This works out to be a compound annual growth rate (CAGR) of approximately 9.1% a year over that time. Companies like this can be very valuable over the long term, if the decent rate of growth can be maintained.

The Dividend Looks Likely To Grow

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. It's encouraging to see Stock Yards Bancorp has been growing its earnings per share at 12% a year over the past five years. Growth in EPS bodes well for the dividend, as does the low payout ratio that the company is currently reporting.

Stock Yards Bancorp Looks Like A Great Dividend Stock

Overall, we like to see the dividend staying consistent, and we think Stock Yards Bancorp might even raise payments in the future. The distributions are easily covered by earnings, and there is plenty of cash being generated as well. However, it is worth noting that the earnings are expected to fall over the next year, which may not change the long term outlook, but could affect the dividend payment in the next 12 months. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. However, there are other things to consider for investors when analysing stock performance. For example, we've picked out 1 warning sign for Stock Yards Bancorp that investors should know about before committing capital to this stock. We have also put together a list of global stocks with a solid dividend.

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