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Bank OZK (OZK) Hikes Dividend: Is the Stock Worth Buying?
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Bank OZK (OZK - Free Report) announces a dividend hike yet again. OZK declared a quarterly cash dividend of 30 cents per share, reflecting a rise of 3.4% from the prior payout. The dividend will be paid out on Jan 21 to shareholders of record as of Jan 14.
This marks the 46th consecutive quarter of dividend hike by Bank OZK. Prior to this, OZK hiked its dividend by 1.8% to 29 cents per share in October 2021. We believe that such disbursements highlight the company’s operational strength and commitment toward enhancing shareholder wealth.
Considering the last day’s closing price of $47.14, Bank OZK’s dividend yield currently stands at 2.53%. Not only is the yield attractive for income investors but it also represents a steady income stream.
Let’s check out whether it is worth considering the stock now based on this dividend income. A deeper research into the bank’s financial performance and fundamentals will help understand its risks and rewards.
Bank OZK has witnessed earnings growth of 1.9% over the past three to five years. Over the past 60 days, the Zacks Consensus Estimate for the company’s 2022 earnings has been revised marginally upward. This shows that analysts are optimistic regarding the company’s earnings growth potential.
Bank OZK also boasts a solid balance sheet. As of Sep 30, 2021, OZK had total debt worth $1.22 billion, and cash and cash equivalents of $1.78 billion. Its times-interest-earned ratio of 41.2 at the end of third-quarter 2021 reflects a sequential improvement.
Thus, the company’s robust liquidity position and decent earnings strength indicate that it will be able to continue with efficient capital deployment activities, thereby enhancing its shareholder value.
Further, Bank OZK’s operations are likely to keep supporting its top-line growth. Though revenues declined in 2019, the same witnessed a CAGR of 15.3% over the last six years (2015-2020), primarily backed by steady loan growth. The uptrend in revenues continued in the first nine months of 2021 as well.
Given a strong balance sheet, OZK is expected to keep expanding through strategic acquisitions. It is also constantly evaluating its branch network and realigning its business per customer needs, with more emphasis on digitization.
Investors are always on the lookout for companies with a track record of consistent and incremental dividend payments. Thus, solid dividend payouts are arguably the biggest enticement for investors. It boosts investor confidence in the stock.
However, continued pressure on margins amid a low interest rate environment remains a major near-term concern for Bank OZK. Persistently increasing expenses and the company's exposure to risky loans are other woes that make us apprehensive about the bank’s prospects.
Banks Taking Similar Steps
Over the past few months, several banks have rewarded shareholders with dividend hikes. Some of these are Farmers National Banc Corp. (FMNB - Free Report) , United Bankshares, Inc. (UBSI - Free Report) and The Community Financial Corporation .
Farmers National announced a 27.3% sequential hike in quarterly dividend to 14 cents per share. The dividend was paid out on Dec 31, 2021 to shareholders on record as of Dec 10. This marked the sixth consecutive quarter of dividend hike by Farmers National. Prior to this, FMNB hiked its dividend by 10% to 11 cents per share.
United Bankshares announced a dividend of 36 cents per share, representing a hike of 2.9% from the prior payout. The dividend was paid out on Jan 3, 2022, to shareholders on record as of Dec 2, 2021.
Prior to this hike, UBSI had increased its quarterly dividend by 2.9% to 35 cents per share in November 2019.
Community Financial announced a 17% sequential hike in its quarterly cash dividend. TCFC will now pay out a dividend of 17.5 cents per share on Jan 24 to its shareholders of record as of Jan 10.
TCFC’s management noted, "Our performance in the past year has been exceptional, despite many pandemic related challenges felt across the industry and Country. This increase in the quarterly dividend reflects the strong financial position of the Company and our continued commitment to returning value to shareholders."
Earlier in February, Community Financial hiked its dividend by 20% to 15 cents per share.
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Bank OZK (OZK) Hikes Dividend: Is the Stock Worth Buying?
Bank OZK (OZK - Free Report) announces a dividend hike yet again. OZK declared a quarterly cash dividend of 30 cents per share, reflecting a rise of 3.4% from the prior payout. The dividend will be paid out on Jan 21 to shareholders of record as of Jan 14.
This marks the 46th consecutive quarter of dividend hike by Bank OZK. Prior to this, OZK hiked its dividend by 1.8% to 29 cents per share in October 2021. We believe that such disbursements highlight the company’s operational strength and commitment toward enhancing shareholder wealth.
Considering the last day’s closing price of $47.14, Bank OZK’s dividend yield currently stands at 2.53%. Not only is the yield attractive for income investors but it also represents a steady income stream.
Let’s check out whether it is worth considering the stock now based on this dividend income. A deeper research into the bank’s financial performance and fundamentals will help understand its risks and rewards.
Bank OZK has witnessed earnings growth of 1.9% over the past three to five years. Over the past 60 days, the Zacks Consensus Estimate for the company’s 2022 earnings has been revised marginally upward. This shows that analysts are optimistic regarding the company’s earnings growth potential.
Bank OZK also boasts a solid balance sheet. As of Sep 30, 2021, OZK had total debt worth $1.22 billion, and cash and cash equivalents of $1.78 billion. Its times-interest-earned ratio of 41.2 at the end of third-quarter 2021 reflects a sequential improvement.
Thus, the company’s robust liquidity position and decent earnings strength indicate that it will be able to continue with efficient capital deployment activities, thereby enhancing its shareholder value.
Further, Bank OZK’s operations are likely to keep supporting its top-line growth. Though revenues declined in 2019, the same witnessed a CAGR of 15.3% over the last six years (2015-2020), primarily backed by steady loan growth. The uptrend in revenues continued in the first nine months of 2021 as well.
Given a strong balance sheet, OZK is expected to keep expanding through strategic acquisitions. It is also constantly evaluating its branch network and realigning its business per customer needs, with more emphasis on digitization.
Investors are always on the lookout for companies with a track record of consistent and incremental dividend payments. Thus, solid dividend payouts are arguably the biggest enticement for investors. It boosts investor confidence in the stock.
Shares of this currently Zacks Rank #2 (Buy) stock have rallied 11% over the past six months compared with the industry’s growth of 14%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
However, continued pressure on margins amid a low interest rate environment remains a major near-term concern for Bank OZK. Persistently increasing expenses and the company's exposure to risky loans are other woes that make us apprehensive about the bank’s prospects.
Banks Taking Similar Steps
Over the past few months, several banks have rewarded shareholders with dividend hikes. Some of these are Farmers National Banc Corp. (FMNB - Free Report) , United Bankshares, Inc. (UBSI - Free Report) and The Community Financial Corporation .
Farmers National announced a 27.3% sequential hike in quarterly dividend to 14 cents per share. The dividend was paid out on Dec 31, 2021 to shareholders on record as of Dec 10. This marked the sixth consecutive quarter of dividend hike by Farmers National. Prior to this, FMNB hiked its dividend by 10% to 11 cents per share.
United Bankshares announced a dividend of 36 cents per share, representing a hike of 2.9% from the prior payout. The dividend was paid out on Jan 3, 2022, to shareholders on record as of Dec 2, 2021.
Prior to this hike, UBSI had increased its quarterly dividend by 2.9% to 35 cents per share in November 2019.
Community Financial announced a 17% sequential hike in its quarterly cash dividend. TCFC will now pay out a dividend of 17.5 cents per share on Jan 24 to its shareholders of record as of Jan 10.
TCFC’s management noted, "Our performance in the past year has been exceptional, despite many pandemic related challenges felt across the industry and Country. This increase in the quarterly dividend reflects the strong financial position of the Company and our continued commitment to returning value to shareholders."
Earlier in February, Community Financial hiked its dividend by 20% to 15 cents per share.