Rocky Brands (NASDAQ:RCKY) Is Increasing Its Dividend To US$0.15

The board of Rocky Brands, Inc. (NASDAQ:RCKY) has announced that it will be increasing its dividend by 11% on the 16th of September to US$0.15. This makes the dividend yield 1.2%, which is above the industry average.

View our latest analysis for Rocky Brands

Rocky Brands' Earnings Easily Cover the Distributions

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. However, Rocky Brands' earnings easily cover the dividend. This means that most of what the business earns is being used to help it grow.

Looking forward, earnings per share could rise by 84.9% over the next year if the trend from the last few years continues. If the dividend continues on this path, the payout ratio could be 9.3% by next year, which we think can be pretty sustainable going forward.

Rocky Brands Doesn't Have A Long Payment History

Rocky Brands' 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. Since 2013, the first annual payment was US$0.40, compared to the most recent full-year payment of US$0.56. This works out to be a compound annual growth rate (CAGR) of approximately 4.3% a year over that time. Rocky Brands hasn't been paying a dividend for very long, so we wouldn't get to excited about its record of growth just yet.

The Dividend Looks Likely To Grow

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. We are encouraged to see that Rocky Brands has grown earnings per share at 85% per year over the past five years. Earnings have been growing rapidly, and with a low payout ratio we think that the company could turn out to be a great dividend stock.

Rocky Brands Looks Like A Great Dividend Stock

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. All in all, this checks a lot of the boxes we look for when choosing an income stock.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Just as an example, we've come across 4 warning signs for Rocky Brands you should be aware of, and 1 of them is potentially serious. 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.
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