TriCo Bancshares (NASDAQ:TCBK) Is Due To Pay A Dividend Of US$0.25

TriCo Bancshares' (NASDAQ:TCBK) investors are due to receive a payment of US$0.25 per share on 24th of June. This payment means the dividend yield will be 2.2%, which is below the average for the industry.

Check out our latest analysis for TriCo Bancshares

TriCo Bancshares' Payment Has Solid Earnings Coverage

While yield is important, another factor to consider about a company's dividend is whether the current payout levels are feasible. However, prior to this announcement, TriCo Bancshares' dividend was comfortably covered by both cash flow and earnings. This means that most of what the business earns is being used to help it grow.

The next year is set to see EPS grow by 13.3%. If the dividend continues along recent trends, we estimate the payout ratio will be 31%, which is in the range that makes us comfortable with the sustainability of the dividend.

TriCo Bancshares Has A Solid Track Record

The company has an extended history of paying stable dividends. The dividend has gone from US$0.36 in 2012 to the most recent annual payment of US$1.00. This works out to be a compound annual growth rate (CAGR) of approximately 11% a year over that time. We can see that payments have shown some very nice upward momentum without faltering, which provides some reassurance that future payments will also be reliable.

TriCo Bancshares Could Grow Its Dividend

Investors could be attracted to the stock based on the quality of its payment history. We are encouraged to see that TriCo Bancshares has grown earnings per share at 8.9% per year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for TriCo Bancshares' prospects of growing its dividend payments in the future.

We'd also point out that TriCo Bancshares has issued stock equal to 13% of shares outstanding. Trying to grow the dividend when issuing new shares reminds us of the ancient Greek tale of Sisyphus - perpetually pushing a boulder uphill. Companies that consistently issue new shares are often suboptimal from a dividend perspective.

We Really Like TriCo Bancshares' Dividend

In summary, it is good to see that the dividend is staying consistent, and we don't think there is any reason to suspect this might change over the medium term. 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. All of these factors considered, we think this has solid potential as a dividend stock.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. However, there are other things to consider for investors when analysing stock performance. Taking the debate a bit further, we've identified 2 warning signs for TriCo Bancshares that investors need to be conscious of moving forward. Is TriCo Bancshares 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.