Stock Yards Bancorp (NASDAQ:SYBT) Will Pay A Larger Dividend Than Last Year At $0.30

Stock Yards Bancorp, Inc. (NASDAQ:SYBT) has announced that it will be increasing its periodic dividend on the 2nd of October to $0.30, which will be 3.4% higher than last year's comparable payment amount of $0.29. Although the dividend is now higher, the yield is only 2.4%, which is below the industry average.

See our latest analysis for Stock Yards Bancorp

Stock Yards Bancorp's Payment Expected To Have Solid Earnings Coverage

If it is predictable over a long period, even low dividend yields can be attractive.

Stock Yards Bancorp has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. Based on Stock Yards Bancorp's last earnings report, the payout ratio is at a decent 29%, meaning that the company is able to pay out its dividend with a bit of room to spare.

Over the next year, EPS is forecast to fall by 8.6%. But assuming the dividend continues along recent trends, we believe the future payout ratio could be 35%, which we are pretty comfortable with and we think would be feasible on an earnings basis.

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 dividend has gone from an annual total of $0.507 in 2013 to the most recent total annual payment of $1.16. This means that it has been growing its distributions at 8.6% per annum over that time. The growth of the dividend has been pretty reliable, so we think this can offer investors some nice additional income in their portfolio.

The Dividend Looks Likely To Grow

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. We are encouraged to see that Stock Yards Bancorp has grown earnings per share at 15% per year over the past five years. Stock Yards Bancorp definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

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 distributions are easily covered by earnings, and there is plenty of cash being generated as well. We should point out that the earnings are expected to fall over the next 12 months, which won't be a problem if this doesn't become a trend, but could cause some turbulence in the next year. Taking this all into consideration, this looks like it could be a good dividend opportunity.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic 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.