Stock Yards Bancorp (NASDAQ:SYBT) Is Increasing Its Dividend To $0.32

Stock Yards Bancorp, Inc. (NASDAQ:SYBT) has announced that it will be increasing its periodic dividend on the 1st of October to $0.32, which will be 3.2% higher than last year's comparable payment amount of $0.31. Despite this raise, the dividend yield of 1.5% is only a modest boost to shareholder returns.

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Stock Yards Bancorp's Dividend Forecasted To Be Well Covered By Earnings

Even a low dividend yield can be attractive if it is sustained for years on end.

Having distributed dividends for at least 10 years, Stock Yards Bancorp has a long history of paying out a part of its earnings to shareholders. Based on Stock Yards Bancorp's last earnings report, the payout ratio is at a decent 28%, meaning that the company is able to pay out its dividend with a bit of room to spare.

The next year is set to see EPS grow by 3.8%. Assuming the dividend continues along recent trends, we think the future payout ratio could be 30% by next year, which is in a pretty sustainable range.

Check out our latest analysis for Stock Yards Bancorp

Stock Yards Bancorp Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. The annual payment during the last 10 years was $0.613 in 2015, and the most recent fiscal year payment was $1.24. This means that it has been growing its distributions at 7.3% per annum 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 could be attracted to the stock based on the quality of its payment history. Stock Yards Bancorp has impressed us by growing EPS at 10% per 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, a dividend increase is always good, and we think that Stock Yards Bancorp is a strong income stock thanks to its track record and growing earnings. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. 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. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. As an example, we've identified 1 warning sign for Stock Yards Bancorp that you should be aware of before investing. Is Stock Yards Bancorp not quite the opportunity you were looking for? Why not check out our selection of top 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.