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Home Bancshares (Conway AR) (NYSE:HOMB) Is Increasing Its Dividend To $0.18

Home Bancshares, Inc. (Conway, AR)'s (NYSE:HOMB) dividend will be increasing from last year's payment of the same period to $0.18 on 7th of June. This takes the annual payment to 3.3% of the current stock price, which is about average for the industry.

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

Home Bancshares (Conway AR)'s Dividend Forecasted To Be Well Covered By Earnings

Solid dividend yields are great, but they only really help us if the payment is sustainable.

Home Bancshares (Conway AR) has a long history of paying out dividends, with its current track record at a minimum of 10 years. Taking data from its last earnings report, calculating for the company's payout ratio shows 40%, which means that Home Bancshares (Conway AR) would be able to pay its last dividend without pressure on the balance sheet.

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The next year is set to see EPS grow by 5.8%. Assuming the dividend continues along recent trends, we think the future payout ratio could be 42% by next year, which is in a pretty sustainable range.

historic-dividend
historic-dividend

Home Bancshares (Conway AR) Has A Solid Track Record

The company has an extended history of paying stable dividends. The annual payment during the last 10 years was $0.12 in 2013, and the most recent fiscal year payment was $0.72. This means that it has been growing its distributions at 20% per annum over that time. Rapidly growing dividends for a long time is a very valuable feature for an income stock.

The Dividend Looks Likely To Grow

The company's investors will be pleased to have been receiving dividend income for some time. We are encouraged to see that Home Bancshares (Conway AR) has grown earnings per share at 11% per year over the past five years. The company is paying a reasonable amount of earnings to shareholders, and is growing earnings at a decent rate so we think it could be a decent dividend stock.

We should note that Home Bancshares (Conway AR) has issued stock equal to 24% of shares outstanding. Regularly doing this can be detrimental - it's hard to grow dividends per share when new shares are regularly being created.

Home Bancshares (Conway AR) Looks Like A Great Dividend Stock

Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. Earnings are easily covering distributions, and the company is generating plenty of cash. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. However, there are other things to consider for investors when analysing stock performance. For example, we've picked out 1 warning sign for Home Bancshares (Conway AR) that investors should know about before committing capital to this stock. Is Home Bancshares (Conway AR) not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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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