Dividends play a key role in compounding returns over time and can form a large part of our portfolio return. In the past 10 years Home Bancshares Inc (Conway, AR) (NASDAQ:HOMB) has returned an average of 1.00% per year to investors in the form of dividend payouts. Does Home Bancshares (Conway AR) tick all the boxes of a great dividend stock? Below, I’ll take you through my analysis. See our latest analysis for Home Bancshares (Conway AR)
5 checks you should do on a dividend stock
If you are a dividend investor, you should always assess these five key metrics:
Is it the top 25% annual dividend yield payer? Has it consistently paid a stable dividend without missing a payment or drastically cutting payout? Has it increased its dividend per share amount over the past? Does earnings amply cover its dividend payments? Will the company be able to keep paying dividend based on the future earnings growth?
NasdaqGS:HOMB Historical Dividend Yield Mar 9th 18
Home Bancshares (Conway AR) has a trailing twelve-month payout ratio of 44.66%, which means that the dividend is covered by earnings. In the near future, analysts are predicting lower payout ratio of 26.80%, leading to a dividend yield of 2.00%. However, EPS should increase to $1.76, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment. If dividend is a key criteria in your investment consideration, then you need to make sure the dividend stock you’re eyeing out is reliable in its payments. HOMB has increased its DPS from $0.04 to $0.44 in the past 10 years. It has also been paying out dividend consistently during this time, as you’d expect for a company increasing its dividend levels. These are all positive signs of a great, reliable dividend stock. In terms of its peers, Home Bancshares (Conway AR) generates a yield of 1.80%, which is on the low-side for Banks stocks.
Keeping in mind the dividend characteristics above, Home Bancshares (Conway AR) is definitely worth considering for investors looking to build a dedicated income portfolio. Given that this is purely a dividend analysis, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. There are three fundamental aspects you should further research:
Future Outlook: What are well-informed industry analysts predicting for HOMB’s future growth? Take a look at our free research report of analyst consensus for HOMB’s outlook.Valuation: What is HOMB worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether HOMB is currently mispriced by the market.Other Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.