Byline Bancorp's (NYSE:BY) Dividend Will Be $0.09

The board of Byline Bancorp, Inc. (NYSE:BY) has announced that it will pay a dividend of $0.09 per share on the 21st of May. This payment means the dividend yield will be 1.7%, which is below the average for the industry.

View our latest analysis for Byline Bancorp

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

While yield is important, another factor to consider about a company's dividend is whether the current payout levels are feasible.

Byline Bancorp has a short history of paying out dividends, with its current track record at only 4 years. 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 4.8% over the next year. But if the dividend continues along recent trends, we estimate the future payout ratio could be 20%, which we would consider to be quite comfortable looking forward, with most of the company's earnings left over to grow the business in the future.

Byline Bancorp Is Still Building Its Track Record

The dividend hasn't seen any major cuts in the past, but the company has only been paying a dividend for 4 years, which isn't that long in the grand scheme of things. Since 2020, the annual payment back then was $0.12, compared to the most recent full-year payment of $0.36. This means that it has been growing its distributions at 32% per annum over that time. We're not overly excited about the relatively short history of dividend payments, however the dividend is growing at a nice rate and we might take a closer look.

The Dividend Looks Likely To Grow

The company's investors will be pleased to have been receiving dividend income for some time. Byline Bancorp has seen EPS rising for the last five years, at 14% per annum. 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.

We should note that Byline Bancorp has issued stock equal to 17% 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 Byline Bancorp's Dividend

Overall, we like to see the dividend staying consistent, and we think Byline Bancorp might even raise payments in the future. 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. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Case in point: We've spotted 4 warning signs for Byline Bancorp (of which 1 is concerning!) you should know about. If you are a dividend investor, you might also want to look at our curated list of high yield 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.