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Capital City Bank (CCBG) Shares Up on 6.7% Dividend Hike

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Shares of Capital City Bank Group, Inc. (CCBG - Free Report) gained around 3% after the company’s board of directors approved a 6.7% sequential hike in its quarterly cash dividend. The company will now pay out a dividend of 16 cents per share, up from 15 cents disbursed in the prior quarter. The increased dividend will be paid out on Sep 27 to its shareholders of record as of Sep 13, 2021.

Based on the raised rate, the annual dividend came to 64 cents a share, resulting in an annualized yield of 2.8%, considering the company’s closing price of $22.65 on Aug 26.

The dividend was last hiked by 7.1% to 15 cents per share in November 2020. This reflects the company’s commitment to return value to shareholders with its strong cash-generation capabilities.

Investors interested in this Zacks Rank #3 (Hold) stock can have a look at the company’s fundamentals and growth opportunities. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Capital City Bank witnessed earnings growth of 25.9% in the last three to five years. This earnings momentum is likely to continue in the near term as indicated by the company’s projected earnings per share (EPS) growth rate for the ongoing year of 9.6%.

The company’s current payout ratio of 28.4% is higher than its industry’s average of 22.1%, Nonetheless, with $845.8 million of cash and cash equivalents and the company’s ability to generate $1.248 billion in additional liquidity through all its available resources, as of Jun 30, there is ample scope for the company to sustain the hiked dividend.

Capital City Bank has been making efforts to reduce its debt. In fact, as of Jun 30, 2021, average short-term borrowings aggregated $51.2 million. This indicated a reduction from $67 million as of Mar 31, 2021 and $95.3 million as of Dec 31, 2020.

Also debt/equity ratio as of second-quarter end of 16.3% improved from 16.9% as of first-quarter end. Improving financial health of the company will help it perform better under a dynamic business environment.

As of Jun 30, 2021, all the company’s regulatory capital ratios exceeded the threshold to be well-capitalized under the Basel III capital standards. Total risk-based capital ratio was 16.48% and tangible common equity ratio was 6.19%.

Shares of Capital City Bank have gained 15% in the past year compared with the 78.1% growth recorded by the industry.

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As investors are always on the lookout for companies with a track record of consistent and incremental dividend payments to bet their money on, solid dividend payouts are therefore arguably the biggest enticement for investors. Such strategic moves also boost investors’ confidence in the stock and will likely bump up the company’s shares in the upcoming period.

Competitive Landscape

In August, several finance companies raised their quarterly dividends.

TFS Financial Corporation’s (TFSL - Free Report) board of directors approved a 0.9% increase in the company’s quarterly dividend to 28.25 cents per share from 28 cents per share. The hiked dividend will be paid on Sep 21, to stockholders of record as on Sep 7, 2021.

Spirit of Texas Bancshares, Inc. (STXB - Free Report) announced that its board of directors has approved a dividend hike. The quarterly common stock dividend has been increased by 33.3% to 12 cents per share. The dividend will be paid out on Sep 24 to shareholders of record as of Sep 10.

Virtus Investment Partners, Inc. (VRTS - Free Report) increased its regular quarterly cash dividend. The company announced a dividend of $1.50 per share, representing an 83% hike from the prior payout. The dividend will be paid out on Nov 12 to shareholders on record as of Oct 29, 2021.