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Bank OZK (OZK) Hikes Dividend: Is the Stock Worth Betting on?
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Similar to the last 42 quarters, Bank OZK (OZK - Free Report) announced a dividend hike yet again. The company announced a quarterly cash dividend of 27.75 cents per share, representing an increase of 0.91% from the prior payout. The dividend will be paid out on Jan 22, 2021, to shareholders of record as of Jan 15.
Since the announcement, shares of the company have gained 1.5%.
Considering last day’s closing price of $31.98, Bank OZK’s dividend yield currently stands at 3.47%. The yield is not only attractive to income investors but it also represents a steady income stream.
Given a robust capital position as well as lower debt-equity and dividend payout ratios compared with peers; the company is expected to sustain its capital deployment activities. Through consistent dividend payments, it will likely continue enhancing shareholder value.
While it seems that Bank OZK stock is an attractive investment option right now based on the dividend income, let’s check its fundamentals to properly understand its risks and rewards.
Bank OZK witnessed earnings growth of 3.5% over the last three-five years. Moreover, in 2021, its earnings are projected to grow 41.3%. Also, the Zacks Consensus Estimate for the company’s 2021 earnings has been revised upward over the past 30 days, reflecting that analysts are optimistic regarding its earnings growth potential.
Further, the company has grown substantially through de novo branching strategy as well as inorganically. Also, given a strong balance sheet position, it is expected to continue expanding through acquisitions. Though its revenues declined in the first nine months of 2020, the same witnessed a compound annual growth rate (“CAGR”) of 22.8% over the last six years (2014-2019).
Additionally, Bank OZK has a solid liquidity position. As of Sep 30, 2020, the bank had total debt worth $1.10 billion, lower than its cash and cash equivalents of $1.93 billion. Though its times-interest-earned ratio of 19.3X in the third quarter of 2020 declined from the prior quarter, its robust liquidity position and decent earnings strength indicate that the bank will be financially viable even in adverse economic conditions.
However, margin pressure due to near-zero interest rates remains a major concern for the company. Also, mounting operating expenses might hurt the bank’s bottom line to some extent in the near term. Thus, one must consider these downsides as well before making any decision.
Over the past six months, shares of Bank OZK have gained 41% compared with the industry’s rise of 32.3%.
Notably, in December 2020, the Federal Reserve eased out the restrictions on capital distributions that were put on U.S. banks because of the pandemic. Following the easing of the restrictions, many large banks including JPMorgan (JPM - Free Report) , Morgan Stanley (MS - Free Report) and State Street (STT - Free Report) are expected to resume share buybacks in first-quarter 2021.
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Bank OZK (OZK) Hikes Dividend: Is the Stock Worth Betting on?
Similar to the last 42 quarters, Bank OZK (OZK - Free Report) announced a dividend hike yet again. The company announced a quarterly cash dividend of 27.75 cents per share, representing an increase of 0.91% from the prior payout. The dividend will be paid out on Jan 22, 2021, to shareholders of record as of Jan 15.
Since the announcement, shares of the company have gained 1.5%.
Considering last day’s closing price of $31.98, Bank OZK’s dividend yield currently stands at 3.47%. The yield is not only attractive to income investors but it also represents a steady income stream.
Given a robust capital position as well as lower debt-equity and dividend payout ratios compared with peers; the company is expected to sustain its capital deployment activities. Through consistent dividend payments, it will likely continue enhancing shareholder value.
While it seems that Bank OZK stock is an attractive investment option right now based on the dividend income, let’s check its fundamentals to properly understand its risks and rewards.
Bank OZK witnessed earnings growth of 3.5% over the last three-five years. Moreover, in 2021, its earnings are projected to grow 41.3%. Also, the Zacks Consensus Estimate for the company’s 2021 earnings has been revised upward over the past 30 days, reflecting that analysts are optimistic regarding its earnings growth potential.
Further, the company has grown substantially through de novo branching strategy as well as inorganically. Also, given a strong balance sheet position, it is expected to continue expanding through acquisitions. Though its revenues declined in the first nine months of 2020, the same witnessed a compound annual growth rate (“CAGR”) of 22.8% over the last six years (2014-2019).
Additionally, Bank OZK has a solid liquidity position. As of Sep 30, 2020, the bank had total debt worth $1.10 billion, lower than its cash and cash equivalents of $1.93 billion. Though its times-interest-earned ratio of 19.3X in the third quarter of 2020 declined from the prior quarter, its robust liquidity position and decent earnings strength indicate that the bank will be financially viable even in adverse economic conditions.
Thus, based on the above-mentioned positives, the stock seems worth investing in. Currently, Bank OZK carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
However, margin pressure due to near-zero interest rates remains a major concern for the company. Also, mounting operating expenses might hurt the bank’s bottom line to some extent in the near term. Thus, one must consider these downsides as well before making any decision.
Over the past six months, shares of Bank OZK have gained 41% compared with the industry’s rise of 32.3%.
Notably, in December 2020, the Federal Reserve eased out the restrictions on capital distributions that were put on U.S. banks because of the pandemic. Following the easing of the restrictions, many large banks including JPMorgan (JPM - Free Report) , Morgan Stanley (MS - Free Report) and State Street (STT - Free Report) are expected to resume share buybacks in first-quarter 2021.
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +50%, +83% and +164% in as little as 2 months. The stocks in this report could perform even better.
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