Home Bancorp (NASDAQ:HBCP) Has Announced A Dividend Of $0.25

Home Bancorp, Inc. (NASDAQ:HBCP) has announced that it will pay a dividend of $0.25 per share on the 10th of May. This means the dividend yield will be fairly typical at 2.8%.

View our latest analysis for Home Bancorp

Home Bancorp's Earnings Will Easily Cover The Distributions

While it is always good to see a solid dividend yield, we should also consider whether the payment is feasible.

Home Bancorp has a good history of paying out dividends, with its current track record at 9 years. While past records don't necessarily translate into future results, the company's payout ratio of 21% also shows that Home Bancorp is able to comfortably pay dividends.

EPS is set to fall by 4.8% over the next 12 months. But if the dividend continues along the path it has been on recently, we estimate the future payout ratio could be 26%, which would be comfortable for the company to continue in the future.

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Home Bancorp Doesn't Have A Long Payment History

It is great to see that Home Bancorp 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. Since 2015, the annual payment back then was $0.28, compared to the most recent full-year payment of $1.00. This means that it has been growing its distributions at 15% 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.

We Could See Home Bancorp's Dividend Growing

Investors could be attracted to the stock based on the quality of its payment history. Home Bancorp has impressed us by growing EPS at 5.9% per year over the past five years. Home Bancorp definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

In Summary

In summary, we are pleased with the dividend remaining consistent, and we think there is a good chance of this continuing in the future. While the payout ratios are a good sign, we are less enthusiastic about the company's dividend record. This looks like it could be a good dividend stock going forward, but we would note that the payout ratio has been at higher levels in the past so it could happen again.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. To that end, Home Bancorp has 2 warning signs (and 1 which is a bit unpleasant) we think you should know about. Is Home Bancorp not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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