Yahoo Finance Old Second Bancorp (NASDAQ:OSBC) Has Affirmed Its Dividend Of $0.05
Old Second Bancorp, Inc. (NASDAQ:OSBC) will pay a dividend of $0.05 on the 6th of May. Including this payment, the dividend yield on the stock will be 1.4%, which is a modest boost for shareholders' returns.
See our latest analysis for Old Second Bancorp
Old Second Bancorp's Earnings Will Easily Cover The Distributions
Even a low dividend yield can be attractive if it is sustained for years on end.
Old Second Bancorp has a good history of paying out dividends, with its current track record at 8 years. While past records don't necessarily translate into future results, the company's payout ratio of 10.0% also shows that Old Second Bancorp is able to comfortably pay dividends.
EPS is set to fall by 4.2% over the next 12 months. But if the dividend continues along recent trends, we estimate the future payout ratio could be 14%, which we would consider to be quite comfortable looking forward, with most of the company's earnings left over to grow the business in the future.
Old Second Bancorp Is Still Building Its Track Record
It is great to see that Old Second 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. The dividend has gone from an annual total of $0.04 in 2016 to the most recent total annual payment of $0.20. This works out to be a compound annual growth rate (CAGR) of approximately 22% a year over that time. We're not overly excited about the relatively short history of dividend payments, however the dividend is growing at a nice rate and we might take a closer look.
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. It's encouraging to see that Old Second Bancorp has been growing its earnings per share at 12% a year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for Old Second Bancorp's prospects of growing its dividend payments in the future.
Old Second Bancorp Looks Like A Great Dividend Stock
Overall, we like to see the dividend staying consistent, and we think Old Second Bancorp might even raise payments in the future. The earnings easily cover the company's distributions, and the company is generating plenty of cash. We should point out that the earnings are expected to fall over the next 12 months, which won't be a problem if this doesn't become a trend, but could cause some turbulence in the next year. Taking this all into consideration, this looks like it could be a good dividend opportunity.
Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Taking the debate a bit further, we've identified 1 warning sign for Old Second Bancorp that investors need to be conscious of moving forward. Is Old Second Bancorp 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.
