Old National Bancorp (NASDAQ:ONB) Has Affirmed Its Dividend Of $0.14
The board of Old National Bancorp (NASDAQ:ONB) has announced that it will pay a dividend on the 16th of June, with investors receiving $0.14 per share. This payment means that the dividend yield will be 2.7%, which is around the industry average.
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Unless the payments are sustainable, the dividend yield doesn't mean too much.
Having distributed dividends for at least 10 years, Old National Bancorp has a long history of paying out a part of its earnings to shareholders. Past distributions do not necessarily guarantee future ones, but Old National Bancorp's payout ratio of 32% is a good sign as this means that earnings decently cover dividends.
Over the next 3 years, EPS is forecast to expand by 69.0%. Analysts forecast the future payout ratio could be 21% over the same time horizon, which is a number we think the company can maintain.
Check out our latest analysis for Old National Bancorp
The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. The dividend has gone from an annual total of $0.44 in 2015 to the most recent total annual payment of $0.56. This means that it has been growing its distributions at 2.4% 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 company's investors will be pleased to have been receiving dividend income for some time. Earnings have grown at around 4.2% a year for the past five years, which isn't massive but still better than seeing them shrink. If Old National Bancorp is struggling to find viable investments, it always has the option to increase its payout ratio to pay more to shareholders.
We should note that Old National Bancorp has issued stock equal to 16% of shares outstanding. Trying to grow the dividend when issuing new shares reminds us of the ancient Greek tale of Sisyphus - perpetually pushing a boulder uphill. Companies that consistently issue new shares are often suboptimal from a dividend perspective.
In summary, it is good to see that the dividend is staying consistent, and we don't think there is any reason to suspect this might change over the medium term. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All of these factors considered, we think this has solid potential as a dividend stock.
Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For instance, we've picked out 2 warning signs for Old National Bancorp that investors should take into consideration. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.
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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