Guaranty Bancshares (NYSE:GNTY) Will Pay A Dividend Of $0.24

Guaranty Bancshares, Inc. (NYSE:GNTY) has announced that it will pay a dividend of $0.24 per share on the 10th of July. This means the dividend yield will be fairly typical at 3.3%.

View our latest analysis for Guaranty Bancshares

Guaranty Bancshares' Earnings Will Easily Cover The Distributions

While it is always good to see a solid dividend yield, we should also consider whether the payment is feasible.

Having paid out dividends for 7 years, Guaranty Bancshares has a good history of paying out a part of its earnings to shareholders. Past distributions do not necessarily guarantee future ones, but Guaranty Bancshares' payout ratio of 38% is a good sign for current shareholders as this means that earnings decently cover dividends.

EPS is set to fall by 0.8% over the next 12 months. But if the dividend continues along recent trends, we estimate the future payout ratio could be 39%, 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.

Guaranty Bancshares Doesn't Have A Long Payment History

It is great to see that Guaranty Bancshares has been paying a stable dividend for a number of years now, however we want to be a bit cautious about whether this will remain true through a full economic cycle. The dividend has gone from an annual total of $0.473 in 2017 to the most recent total annual payment of $0.96. This means that it has been growing its distributions at 11% 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.

We Could See Guaranty Bancshares' Dividend Growing

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. It's encouraging to see that Guaranty Bancshares has been growing its earnings per share at 8.2% a year over the past five years. Guaranty Bancshares definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

We Really Like Guaranty Bancshares' Dividend

Overall, we like to see the dividend staying consistent, and we think Guaranty Bancshares might even raise payments in the future. The company is generating plenty of cash, and the earnings also quite easily cover the distributions. We should point out that the earnings are expected to fall over the next 12 months, which won't be a problem if this doesn't become a trend, but could cause some turbulence in the next year. All of these factors considered, we think this has solid potential as a dividend 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. Case in point: We've spotted 2 warning signs for Guaranty Bancshares (of which 1 is potentially serious!) you should know about. Is Guaranty Bancshares not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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