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Horizon Bancorp (HBNC) Hikes Dividend: Is it Worth Buying?

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Horizon Bancorp, Inc. (HBNC - Free Report) has announced a dividend hike yet again. The company’s board of directors approved a quarterly cash dividend of 13 cents per share, marking an 8.3% increase from the prior payout. The dividend will be paid out on Apr 16, to shareholders of record as of Apr 2.

Considering last day’s closing price of $19.39, Horizon Bancorp’s dividend yield currently stands at 2.7%. This yield is not only attractive to income investors but also represents a steady income stream. Also, it is impressive compared with the industry’s 1.86%.

Horizon Bancorp is expected to continue enhancing shareholders’ value through sustained capital deployment activities. Prior to this hike, it raised its quarterly dividend by 20% in June 2019 to 12 cents per share.

While it seems that Horizon Bancorp stock is an attractive investment option right now based on the dividend income, investors interested in this Zacks Rank #2 (Buy) stock can take a look at the company’s fundamentals and growth prospects to properly understand its rewards and risks.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Over the last three-five years, Horizon Bancorp’s earnings have witnessed growth of 14.2%.

The stock currently seems undervalued when compared with the broader industry. It has a price/earnings (F1) ratio of 13.00, which is marginally below the industry’s 13.21. Also, its Price/Cash Flow (P/CF) ratio of 9.68 is below the industry’s 11.89.

Horizon Bancorp’s return on equity of 10.36% compares favorably with the industry’s 8.56%, highlighting the company’s competitive edge over its peers.

Over the past six months, shares of Horizon Bancorp have risen 98.8%, outperforming the industry’s 90.5%.

The company has been witnessing upward earnings estimate revisions of late, indicating that analysts are optimistic regarding its earnings growth potential. The Zacks Consensus Estimate has moved 12.9% and 10.9% upward for 2021 and 2022, respectively, over the past 60 days.

However, the company’s earnings are projected to decline 2.6% in 2021.Thus, one must consider this downside before taking any investment decision.

Other Finance Companies Taking Similar Action

In the current year, several finance stocks have announced dividend hikes. Some of these companies include Fulton Financial Corporation (FULT - Free Report) , First Bancorp (FBNC - Free Report) and Cohen & Steers (CNS - Free Report) . Fulton Financial announced a quarterly cash dividend of 14 cents per share, representing an increase of 7.7% from the prior payout. First Bancorp’s board of directors approved a cash dividend on its common stock of 20 cents per share, representing an11.1% hike. Cohen & Steers announced a 15.4% increase in its cash dividend to 45 cents per share.

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