Yahoo Finance Heritage Commerce (NASDAQ:HTBK) Is Due To Pay A Dividend Of $0.13
The board of Heritage Commerce Corp (NASDAQ:HTBK) has announced that it will pay a dividend on the 25th of August, with investors receiving $0.13 per share. Based on this payment, the dividend yield on the company's stock will be 4.4%, which is an attractive boost to shareholder returns.
Check out our latest analysis for Heritage Commerce
Heritage Commerce's Payment Expected To Have Solid Earnings Coverage
Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained.
Heritage Commerce has a good history of paying out dividends, with its current track record at 9 years. Past distributions do not necessarily guarantee future ones, but Heritage Commerce's payout ratio of 57% is a good sign for current shareholders as this means that earnings decently cover dividends.
Over the next year, EPS is forecast to expand by 56.8%. If the dividend continues on this path, the future payout ratio could be 39% by next year, which we think can be pretty sustainable going forward.
Heritage Commerce Is Still Building Its Track Record
Even though the company has been paying a consistent dividend for a while, we would like to see a few more years before we feel comfortable relying on it. Since 2013, the dividend has gone from $0.12 total annually to $0.52. This means that it has been growing its distributions at 18% per annum over that time. Heritage Commerce has been growing its dividend quite rapidly, which is exciting. However, the short payment history makes us question whether this performance will persist across a full market cycle.
Dividend Growth May Be Hard To Achieve
Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Earnings per share has been crawling upwards at 4.4% per year. Heritage Commerce is struggling to find viable investments, so it is returning more to shareholders. This isn't bad in itself, but unless earnings growth pick up we wouldn't expect dividends to grow either.
In Summary
Overall, a consistent dividend is a good thing, and we think that Heritage Commerce has the ability to continue this into the future. The payout ratio looks good, but unfortunately the company's dividend track record isn't stellar. Taking all of this into consideration, the dividend looks viable moving forward, but investors should be mindful that the company has pushed the boundaries of sustainability in the past and may do so again.
Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. However, there are other things to consider for investors when analysing stock performance. As an example, we've identified 2 warning signs for Heritage Commerce that you should be aware of before investing. If you are a dividend investor, you might also want to look at our curated list of high yield 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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