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

Byline Bancorp, Inc.'s (NYSE:BY) investors are due to receive a payment of $0.09 per share on 20th of February. This means the annual payment will be 1.6% of the current stock price, which is lower than the industry average.

View our latest analysis for Byline Bancorp

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

The dividend yield is a little bit low, but sustainability of the payments is also an important part of evaluating an income stock.

Having paid out dividends for only 4 years, Byline Bancorp does not have much of a history being a dividend paying company. Based on its last earnings report however, the payout ratio is at a comfortable 13%, meaning that Byline Bancorp may be able to sustain this dividend for future years if it continues on this earnings trend.

Looking forward, earnings per share is forecast to fall by 11.9% over the next 3 years. However, as estimated by analysts, the future payout ratio could be 17% over the same time period, which we think the company can easily maintain.

Byline Bancorp Doesn't Have A Long Payment History

Looking back, the dividend has been stable, but the company hasn't been paying a dividend for very long so we can't be confident that the dividend will remain stable through all economic environments. The annual payment during the last 4 years was $0.12 in 2020, and the most recent fiscal year payment was $0.36. This works out to be a compound annual growth rate (CAGR) of approximately 32% a year over that time. Byline Bancorp has been growing its dividend quite rapidly, which is exciting. However, the short payment history makes us question whether this performance will persist across a full market cycle.

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. It's encouraging to see that Byline Bancorp has been growing its earnings per share at 15% a year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for Byline Bancorp's prospects of growing its dividend payments in the future.

An additional note is that the company has been raising capital by issuing stock equal to 17% of shares outstanding in the last 12 months. Regularly doing this can be detrimental - it's hard to grow dividends per share when new shares are regularly being created.

We Really Like Byline Bancorp's 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 generating plenty of cash, and the earnings also quite easily cover the distributions. If earnings do fall over the next 12 months, the dividend could be buffeted a little bit, but we don't think it should cause too much of a problem in the long term. All of these factors considered, we think this has solid potential as a dividend stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Taking the debate a bit further, we've identified 2 warning signs for Byline Bancorp that investors need to be conscious of moving forward. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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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.