The board of LCNB Corp. (NASDAQ:LCNB) has announced that the dividend on 15th of December will be increased to $0.21, which will be 5.0% higher than last year's payment of $0.20 which covered the same period. This will take the annual payment to 4.5% of the stock price, which is above what most companies in the industry pay.
LCNB's Earnings Will Easily Cover The Distributions
While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable.
LCNB 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 44%, which means that LCNB would be able to pay its last dividend without pressure on the balance sheet.
Looking forward, earnings per share is forecast to rise by 2.7% over the next year. If the dividend continues along recent trends, we estimate the future payout ratio will be 43%, which is in the range that makes us comfortable with the sustainability of the dividend.
LCNB Has A Solid Track Record
The company has a sustained record of paying dividends with very little fluctuation. Since 2012, the dividend has gone from $0.64 total annually to $0.80. This means that it has been growing its distributions at 2.3% per annum over that time. Although we can't deny that the dividend has been remarkably stable in the past, the growth has been pretty muted.
The Dividend Has Growth Potential
Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. It's encouraging to see that LCNB has been growing its earnings per share at 7.7% a year over the past five years. Shareholders are getting plenty of the earnings returned to them, which combined with strong growth makes this quite appealing.
We Really Like LCNB's Dividend
Overall, a dividend increase is always good, and we think that LCNB is a strong income stock thanks to its track record and growing earnings. Earnings are easily covering distributions, and the company is generating plenty of cash. All in all, this checks a lot of the boxes we look for when choosing an income stock.
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. You can also discover whether shareholders are aligned with insider interests by checking our visualisation of insider shareholdings and trades in LCNB stock. Is LCNB 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.
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