Equity Bancshares (NYSE:EQBK) Is Paying Out A Larger Dividend Than Last Year

Equity Bancshares, Inc. (NYSE:EQBK) will increase its dividend on the 15th of October to $0.18, which is 20% higher than last year's payment from the same period of $0.15. This takes the annual payment to 1.4% of the current stock price, which unfortunately is below what the industry is paying.

This technology could replace computers: discover the 20 stocks are working to make quantum computing a reality.

Equity Bancshares' Payment Expected To Have Solid Earnings Coverage

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

Equity Bancshares is just starting to establish itself as being able to pay dividends to shareholders, given its short 4-year history of distributing earnings. Despite the company's shorter dividend history however, calculating for its payout ratio of 15% shows that Equity Bancshares is able to comfortably pay dividends.

The next 3 years are set to see EPS grow by 31.0%. The future payout ratio could be 13% over that time period, according to analyst estimates, which is a good look for the future of the dividend.

Check out our latest analysis for Equity Bancshares

Equity Bancshares Doesn't Have A Long Payment History

The dividend has been pretty stable looking back, but the company hasn't been paying one for very long. This makes it tough to judge how it would fare through a full economic cycle. The dividend has gone from an annual total of $0.32 in 2021 to the most recent total annual payment of $0.60. This implies that the company grew its distributions at a yearly rate of about 17% over that duration. Equity Bancshares 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

The company's investors will be pleased to have been receiving dividend income for some time. Equity Bancshares has seen EPS rising for the last five years, at 18% per annum. A low payout ratio and decent growth suggests that the company is reinvesting well, and it also has plenty of room to increase the dividend over time.

We should note that Equity Bancshares has issued stock equal to 26% of shares outstanding. Regularly doing this can be detrimental - it's hard to grow dividends per share when new shares are regularly being created.

We Really Like Equity Bancshares' Dividend

Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. Earnings are easily covering distributions, and the company is generating plenty of cash. All in all, this checks a lot of the boxes we look for when choosing an income stock.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. However, there are other things to consider for investors when analysing stock performance. As an example, we've identified 1 warning sign for Equity Bancshares that you should be aware of before investing. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.