Home Bancshares (Conway AR)'s (NYSE:HOMB) Dividend Will Be Increased To US$0.17

Home Bancshares, Inc. (Conway, AR) (NYSE:HOMB) has announced that it will be increasing its dividend on the 9th of March to US$0.17, which will be 18% higher than last year. Based on the announced payment, the dividend yield for the company will be 2.5%, which is fairly typical for the industry.

Check out our latest analysis for Home Bancshares (Conway AR)

Home Bancshares (Conway AR)'s Payment Has Solid Earnings Coverage

Solid dividend yields are great, but they only really help us if the payment is sustainable. Before making this announcement, Home Bancshares (Conway AR) was easily earning enough to cover the dividend. This means that most of what the business earns is being used to help it grow.

Looking forward, earnings per share is forecast to fall by 26.5% over the next year. If the dividend continues along recent trends, we estimate the payout ratio could be 46%, which we consider to be quite comfortable, with most of the company's earnings left over to grow the business in the future.

Home Bancshares (Conway AR) Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. The dividend has gone from US$0.054 in 2012 to the most recent annual payment of US$0.56. This implies that the company grew its distributions at a yearly rate of about 26% over that duration. It is good to see that there has been strong dividend growth, and that there haven't been any cuts for a long time.

We Could See Home Bancshares (Conway AR)'s Dividend Growing

The company's investors will be pleased to have been receiving dividend income for some time. It's encouraging to see Home Bancshares (Conway AR) has been growing its earnings per share at 9.1% a year over the past five years. 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 Really Like Home Bancshares (Conway AR)'s Dividend

Overall, a dividend increase is always good, and we think that Home Bancshares (Conway AR) is a strong income stock thanks to its track record and growing earnings. The distributions are easily covered by earnings, and there is plenty of cash being generated as well. 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.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Earnings growth generally bodes well for the future value of company dividend payments. See if the 6 Home Bancshares (Conway AR) analysts we track are forecasting continued growth with our free report on analyst estimates for the company. If you are a dividend investor, you might also want to look at our curated list of high performing dividend stock.

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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.