Byline Bancorp (NYSE:BY) Is Due To Pay A Dividend Of $0.09

Byline Bancorp, Inc. (NYSE:BY) will pay a dividend of $0.09 on the 22nd of November. This means the annual payment will be 1.5% of the current stock price, which is lower than the industry average.

See our latest analysis for Byline Bancorp

Byline Bancorp's Dividend Forecasted To Be Well Covered By Earnings

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

Byline Bancorp has a short history of paying out dividends, with its current track record at only 3 years. While it has a shorter history of paying out dividends, Byline Bancorp's payout ratio of 16% is a great sign for current shareholders, as this means that earnings greatly cover dividends.

The next 3 years are set to see EPS grow by 6.5%. Analysts forecast the future payout ratio could be 20% over the same time horizon, which is a number we think the company can maintain.

Byline Bancorp Doesn't Have A Long Payment History

The company has maintained a consistent dividend for a few years now, but we would like to see a longer track record before relying on it. The dividend has gone from an annual total of $0.12 in 2019 to the most recent total annual payment of $0.36. This means that it has been growing its distributions at 44% per annum over that time. It is always nice to see strong dividend growth, but with such a short payment history we wouldn't be inclined to rely on it until a longer track record can be developed.

Dividend Growth Is Doubtful

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Unfortunately things aren't as good as they seem. Over the past five years, it looks as though Byline Bancorp's EPS has declined at around 5.7% a year. Declining earnings will inevitably lead to the company paying a lower dividend in line with lower profits. However, the next year is actually looking up, with earnings set to rise. We would just wait until it becomes a pattern before getting too excited.

Our Thoughts On Byline Bancorp's Dividend

Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. While Byline Bancorp is earning enough to cover the dividend, we are generally unimpressed with its future prospects. We don't think Byline Bancorp is a great stock to add to your portfolio if income is your focus.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Without at least some growth in earnings per share over time, the dividend will eventually come under pressure either from competition or inflation. Businesses can change though, and we think it would make sense to see what analysts are forecasting for the company. Is Byline 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.