Summit State Bank (NASDAQ:SSBI) Will Pay A Dividend Of $0.12

The board of Summit State Bank (NASDAQ:SSBI) has announced that it will pay a dividend of $0.12 per share on the 16th of February. Based on this payment, the dividend yield will be 3.0%, which is fairly typical for the industry.

Check out our latest analysis for Summit State Bank

Summit State Bank's Earnings Will Easily Cover The Distributions

While it is always good to see a solid dividend yield, we should also consider whether the payment is feasible.

Having distributed dividends for at least 10 years, Summit State Bank has a long history of paying out a part of its earnings to shareholders. While past data isn't a guarantee for the future, Summit State Bank's latest earnings report puts its payout ratio at 19%, showing that the company can pay out its dividends comfortably.

If the trend of the last few years continues, EPS will grow by 38.6% over the next 12 months. If the dividend continues on this path, the future payout ratio could be 14% by next year, which we think can be pretty sustainable going forward.

Summit State Bank Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2013, the annual payment back then was $0.262, compared to the most recent full-year payment of $0.48. This implies that the company grew its distributions at a yearly rate of about 6.2% over that duration. Dividends have grown at a reasonable rate over this period, and without any major cuts in the payment over time, we think this is an attractive combination as it provides a nice boost to shareholder returns.

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 Summit State Bank has been growing its earnings per share at 39% a year over the past five years. Rapid earnings growth and a low payout ratio suggest this company has been effectively reinvesting in its business. Should that continue, this company could have a bright future.

Summit State Bank Looks Like A Great Dividend Stock

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. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. All in all, this checks a lot of the boxes we look for when choosing an income stock.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. However, there are other things to consider for investors when analysing stock performance. See if management have their own wealth at stake, by checking insider shareholdings in Summit State Bank stock. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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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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