SmartFinancial (NYSE:SMBK) Has Announced A Dividend Of $0.08

The board of SmartFinancial, Inc. (NYSE:SMBK) has announced that it will pay a dividend of $0.08 per share on the 18th of February. The dividend yield is 0.9% based on this payment, which is a little bit low compared to the other companies in the industry.

See our latest analysis for SmartFinancial

SmartFinancial's Earnings Will Easily Cover The Distributions

While yield is important, another factor to consider about a company's dividend is whether the current payout levels are feasible.

SmartFinancial has established itself as a dividend paying company, given its 5-year history of distributing earnings to shareholders. While past data isn't a guarantee for the future, SmartFinancial's latest earnings report puts its payout ratio at 15%, showing that the company can pay out its dividends comfortably.

The next 3 years are set to see EPS grow by 50.2%. 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.

SmartFinancial Doesn't Have A Long Payment History

SmartFinancial's dividend has been pretty stable for a little while now, but we will continue to be cautious until it has been demonstrated for a few more years. The dividend has gone from an annual total of $0.20 in 2020 to the most recent total annual payment of $0.32. This works out to be a compound annual growth rate (CAGR) of approximately 9.9% a year over that time. SmartFinancial has been growing its dividend at a decent rate, and the payments have been stable. However, the payment history is very short, so there is no evidence yet that the dividend can be sustained over a full economic cycle.

SmartFinancial May Find It Hard To Grow The Dividend

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. However, SmartFinancial has only grown its earnings per share at 2.3% per annum over the past five years. While growth may be thin on the ground, SmartFinancial could always pay out a higher proportion of earnings to increase shareholder returns.

Our Thoughts On SmartFinancial's Dividend

Overall, we think SmartFinancial is a solid choice as a dividend stock, even though the dividend wasn't raised this year. While the payout ratios are a good sign, we are less enthusiastic about the company's dividend record. Taking all of this into consideration, the dividend looks viable moving forward, but investors should be mindful that the company has pushed the boundaries of sustainability in the past and may do so again.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For example, we've picked out 1 warning sign for SmartFinancial that investors should know about before committing capital to this stock. Is SmartFinancial not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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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.