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ServisFirst (SFBS) Shares Climb on 15% Dividend Increase

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ServisFirst Bancshares, Inc.’s (SFBS - Free Report) board of directors has sequentially increased the company’s quarterly dividend by 15%. The company will now pay a dividend of 23 cents per share, up from 20 cents paid out in the prior quarter. The increased dividend will be paid out on Jan 7 to shareholders of record as of Jan 1, 2022.

Reflecting the impacts of this positive news, shares of ServisFirst gained 4.3% in yesterday’s trading hours.

Based on the increased rate, the annual dividend came to 92 cents a share, resulting in an annualized yield of 1.1%, considering the company’s closing price of $84.97 as of Dec 21. The yield is not only attractive to income investors but also represents a steady income stream.

The company has hiked its dividend every year since 2014. In December 2020, it increased the dividend by 14.3% to 20 cents per share.

ServisFirst’s ability to sustain the hiked dividend depends on earnings growth and the payout ratio. The company’s current payout ratio is 21.22%, lower than the industry’s average of 36.56%, indicating decent scope for a steady dividend increase.

Additionally, ServisFirst’s performance depicts a robust earnings picture. Over the last five years, the company’s earnings grew at a 20.5% rate, significantly higher than the industry average of 10.8%. The momentum is likely to continue in the upcoming period, as indicated by 21.4% projected earnings growth over the next five years.

Conclusion

We believe that such continuous hikes highlight SFBS’s operational strength and commitment toward rewarding shareholders handsomely.

Lastly, as investors are always on the lookout for companies with a track record of consistent and incremental dividend payments to betting their money on, solid dividend payouts are arguably the biggest enticement for such investors. Such moves also boost shareholders’ confidence in ServisFirst.

However, low interest rates and weak loan demand are likely to hurt its financials in the near term.

SFBS carries a Zacks Rank #3 (Hold) at present. The company has gained 24.6% against its industry’s decline of 2.1% over the past six months.

 

Zacks Investment ResearchImage Source: Zacks Investment Research

 

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

Other Companies Undertaking Similar Action

Over the past few months, several banks have rewarded shareholders with dividend hikes. Some of these are Franklin Resources, Inc. (BEN - Free Report) , Saratoga Investment Corp. (SAR - Free Report) and Washington Trust Bancorp, Inc. (WASH - Free Report) .

Franklin’s board of directors has announced a sequential hike in the quarterly dividend by around 4%. The company will now pay a dividend of 29 cents per share, up from 28 cents paid out in the prior quarter. The increased dividend will be paid out on Jan 14 to shareholders of record as of Dec 31, 2021.

Franklin has a share-repurchase authorization in place. It repurchased 7.3 million shares for $208.2 million in fiscal 2021 (ended Sep 30, 2021). As of Sep 30, 2021, 30.9 million shares remained to be repurchased under the authorization of 80 million shares approved in April 2018.

Saratoga Investment’s board of directors has announced a 1.9% sequential hike in the dividend for the fiscal third quarter, ended Nov 30, 2021. SAR will now pay a dividend of 53 cents per share, up from 52 cents paid out in the prior quarter.

The increased dividend will be paid out on Jan 19 to shareholders of record as of Jan 4, 2022. This marks Saratoga Investment’s fourth dividend hike in fiscal 2022.

Washington Trust’s board of directors declared a quarterly dividend per share of 54 cents, indicating a sequential increase of two cents. The dividend will be paid out on Jan 7 to shareholders of record as of Jan 3, 2022. The increase represents the eleventh consecutive year of a dividend hike.

In addition to the dividend hike, Washington Trust also has a share repurchase program in place. In November, Washington Trust’s board of directors approved a repurchase of about 5% of its outstanding common stock or 850,000 shares. WASH’s new buyback plan expires on Dec 31, 2022. As of Oct 31, 2021, the company had 17.3 million shares outstanding.