HomeTrust Bancshares (NYSE:HTB) Is Increasing Its Dividend To $0.13

The board of HomeTrust Bancshares, Inc. (NYSE:HTB) has announced that it will be increasing its dividend by 8.3% on the 28th of November to $0.13, up from last year's comparable payment of $0.12. This takes the annual payment to 1.2% of the current stock price, which unfortunately is below what the industry is paying.

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HomeTrust Bancshares' Payment Expected To Have Solid Earnings Coverage

Even a low dividend yield can be attractive if it is sustained for years on end.

HomeTrust Bancshares has established itself as a dividend paying company, given its 7-year history of distributing earnings to shareholders. While past data isn't a guarantee for the future, HomeTrust Bancshares' latest earnings report puts its payout ratio at 3.3%, showing that the company can pay out its dividends comfortably.

EPS is set to fall by 3.9% over the next 3 years. However, as estimated by analysts, the future payout ratio could be 15% over the same time period, which we think the company can easily maintain.

View our latest analysis for HomeTrust Bancshares

HomeTrust Bancshares Is Still Building Its Track Record

It is great to see that HomeTrust 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 annual payment during the last 7 years was $0.24 in 2018, and the most recent fiscal year payment was $0.48. This means that it has been growing its distributions at 10% 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.

The Dividend Looks Likely To Grow

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. HomeTrust Bancshares has impressed us by growing EPS at 25% per year over the past five years. A low payout ratio gives the company a lot of flexibility, and growing earnings also make it very easy for it to grow the dividend.

HomeTrust Bancshares Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that HomeTrust Bancshares is a strong income stock thanks to its track record and growing earnings. The earnings easily cover the company's distributions, and the company is generating plenty of cash. 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. However, there are other things to consider for investors when analysing stock performance. For example, we've picked out 1 warning sign for HomeTrust Bancshares that investors should know about before committing capital to this stock. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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