An Insightful Look into Independent Bank Corp's Dividend Sustainability
Independent Bank Corp (INDB, Financial) recently announced a dividend of $0.55 per share, payable on 2024-01-05, with the ex-dividend date set for 2023-12-22. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into Independent Bank Corp's dividend performance and assess its sustainability.
What Does Independent Bank Corp Do?
Independent Bank Corp is a bank holding company and the sole shareholder of its bank, the Rockland Trust Company. Rockland is a community-oriented commercial bank. The bank's revenue is derived from a wide array of banking services, including lending activities, acceptance of demand, savings, and time deposits, and investment management. Rockland has historically relied heavily on both organic growth and select merger and acquisition activity to drive growth. The bank's loan portfolio constitutes the bulk of the bank's total assets. Its borrowers consist mostly of small to medium-size businesses and consumers, most of which are made to its market area in eastern Massachusetts and Rhode Island. The bank's loan portfolio is predominantly in commercial loans.
A Glimpse at Independent Bank Corp's Dividend History
Independent Bank Corp has maintained a consistent dividend payment record since 1994. Dividends are currently distributed on a quarterly basis.
Independent Bank Corp has increased its dividend each year since 1994. The stock is thus listed as a dividend aristocrat, an honor that is given to companies that have increased their dividend each year for at least the past 29 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Independent Bank Corp's Dividend Yield and Growth
As of today, Independent Bank Corp currently has a 12-month trailing dividend yield of 3.37% and a 12-month forward dividend yield of 3.37%. This suggests an expectation of the same dividend payments over the next 12 months.
Over the past three years, Independent Bank Corp's annual dividend growth rate was 5.70%. Extended to a five-year horizon, this rate increased to 9.50% per year. And over the past decade, Independent Bank Corp's annual dividends per share growth rate stands at an impressive 10.50%.
Based on Independent Bank Corp's dividend yield and five-year growth rate, the 5-year yield on cost of Independent Bank Corp stock as of today is approximately 5.31%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-09-30, Independent Bank Corp's dividend payout ratio is 0.38.
Independent Bank Corp's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Independent Bank Corp's profitability 6 out of 10 as of 2023-09-30, suggesting fair profitability. The company has reported positive net income for each of year over the past decade, further solidifying its high profitability.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Independent Bank Corp's growth rank of 6 out of 10 suggests that the company has a fair growth outlook.
Revenue is the lifeblood of any company, and Independent Bank Corp's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Independent Bank Corp's revenue has increased by approximately 0.50% per year on average, a rate that underperforms than approximately 80.47% of global competitors.
The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, Independent Bank Corp's earnings increased by approximately 1.10% per year on average, a rate that underperforms than approximately 74.39% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 8.10%, which underperforms than approximately 49.62% of global competitors.
Conclusion: Evaluating Independent Bank Corp's Dividend Future
In conclusion, Independent Bank Corp has demonstrated a strong commitment to its shareholders through a consistent history of dividend payments and growth. The company's reasonable payout ratio and profitability rank indicate a sustainable dividend policy. However, the growth metrics present a mixed outlook, suggesting that while the company has a sound foundation, it may face challenges outpacing the growth of its global competitors. Investors should consider these factors when evaluating the future prospects of Independent Bank Corp's dividends. For those seeking additional high-dividend yield opportunities, GuruFocus Premium users can utilize the High Dividend Yield Screener.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
