Home Bancshares, Inc. (Conway, AR) (NYSE:HOMB) Passed Our Checks, And It's About To Pay A US$0.17 Dividend

By
Simply Wall St
Published
May 13, 2022
NYSE:HOMB
Source: Shutterstock

It looks like Home Bancshares, Inc. (Conway, AR) (NYSE:HOMB) is about to go ex-dividend in the next 3 days. Typically, the ex-dividend date is one business day before the record date which is the date on which a company determines the shareholders eligible to receive a dividend. It is important to be aware of the ex-dividend date because any trade on the stock needs to have been settled on or before the record date. Meaning, you will need to purchase Home Bancshares (Conway AR)'s shares before the 17th of May to receive the dividend, which will be paid on the 8th of June.

The company's next dividend payment will be US$0.17 per share. Last year, in total, the company distributed US$0.66 to shareholders. Based on the last year's worth of payments, Home Bancshares (Conway AR) stock has a trailing yield of around 3.3% on the current share price of $20.25. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! So we need to check whether the dividend payments are covered, and if earnings are growing.

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

Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. Fortunately Home Bancshares (Conway AR)'s payout ratio is modest, at just 33% of profit.

When a company paid out less in dividends than it earned in profit, this generally suggests its dividend is affordable. The lower the % of its profit that it pays out, the greater the margin of safety for the dividend if the business enters a downturn.

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

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NYSE:HOMB Historic Dividend May 13th 2022

Have Earnings And Dividends Been Growing?

Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. This is why it's a relief to see Home Bancshares (Conway AR) earnings per share are up 7.2% per annum over the last five years.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. In the last 10 years, Home Bancshares (Conway AR) has lifted its dividend by approximately 26% a year on average. It's encouraging to see the company lifting dividends while earnings are growing, suggesting at least some corporate interest in rewarding shareholders.

To Sum It Up

Has Home Bancshares (Conway AR) got what it takes to maintain its dividend payments? Home Bancshares (Conway AR) has seen its earnings per share grow slowly in recent years, and the company reinvests more than half of its profits in the business, which generally bodes well for its future prospects. We think this is a pretty attractive combination, and would be interested in investigating Home Bancshares (Conway AR) more closely.

Wondering what the future holds for Home Bancshares (Conway AR)? See what the six analysts we track are forecasting, with this visualisation of its historical and future estimated earnings and cash flow

Generally, we wouldn't recommend just buying the first dividend stock you see. Here's a curated list of interesting stocks that are strong dividend payers.

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