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Should You Buy Bank OZK (OZK) Stock to Earn Higher Dividend?
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Earlier this week, Bank OZK (OZK - Free Report) announced a dividend hike yet again. The company declared a quarterly cash dividend of 33 cents per share, reflecting a rise of 3.1% from the prior payout. The dividend will be paid out on Oct 21 to shareholders of record as of Oct 14.
This marks the 49th consecutive quarter of dividend hike by Bank OZK. Prior to this, the company hiked its dividend by 3.2% to 32 cents per share in July 2022.
Considering the last day’s closing price of $42.34, Bank OZK’s dividend yield currently stands at 3.02%, which is impressive compared with the industry average of 2.27%. Not only is the yield attractive for income investors but it also represents a steady income stream.
Further, OZK has raised its quarterly dividend 21 times in the last five years. Also, it has a five-year annualized dividend growth of 12.1%. Currently, the company's payout ratio is 29% of earnings.
The company has a share buyback program in place too. As of Jun 30, 2022, $177.6 million worth of shares were left to be repurchased. The plan is set to expire on Nov 4, 2022.
Bank OZK boasts a solid balance sheet. 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.
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. Because of Bank OZK’s track record of raising quarterly dividend, it has been part of the S&P High Yield Dividend Aristocrats index since 2018.
But before we can decide whether to buy the stock or not, let’s check out the bank’s financial performance and fundamentals, which will help us understand its risks and rewards.
Bank OZK has witnessed earnings growth of 5.9% over the past three to five years. The company’s earnings are expected to grow almost 1% this year and 8.8% in 2023. Also, over the past month, the Zacks Consensus Estimate for the company’s 2022 earnings has been revised marginally upward. This shows that analysts are bullish regarding the company’s earnings growth potential.
OZK has grown substantially through de novo branching strategy and inorganically. Its revenues witnessed a CAGR of 9.4% over the last six years (2016-2021), mainly driven by steady loan growth and a rise in fee income. Bank OZK has been able to grow deposit balances as well. Over the five-year period ended 2021, deposits witnessed a CAGR of 4.1%. This has aided revenue growth and the positive trend is expected to continue in the near term.
With the Federal Reserve having already raised rates a few times this year, along with expectations of more such hikes in 2022, Bank OZK’s net interest margin is anticipated to improve further.
Further, the change in the operating backdrop in 2020 has led banks to realign their businesses per customer needs, with more emphasis on digitization. Likewise, Bank OZK evaluated its branch network and has exited from Alabama and South Carolina, while closing a few branches in Arkansas, Florida, Georgia and New York.
However, persistently increasing expenses and the company's exposure to risky loans are near-term headwinds that make us apprehensive about the bank’s prospects.
Dividend Hikes by Other Finance Companies
Trinity Capital Inc. (TRIN - Free Report) has announced a hike in its quarterly dividend. TRIN’s board of directors declared a cash dividend of 60 cents per share for the third quarter. The dividend will be paid out on Oct 14 to shareholders of record as of Sep 30, 2022.
The amount declared by TRIN consists of a regular quarterly dividend of 45 cents per share and a supplemental cash dividend of 15 cents. The regular quarterly dividend of 45 cents indicates an increase of 3 cents or 7.1% from the prior quarter.
TriCo Bancshares (TCBK - Free Report) has hiked its quarterly cash dividend. The company’s board of directors announced a dividend of 30 cents per share, representing a hike of 20% from the prior payout. The dividend was paid out on Sep 23, 2022, to stockholders of record as of Sep 9.
Before the hike, TCBK announced a dividend increase of 13.6% in March 2021. The dividend was raised from 22 cents per share to 25 cents.
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Should You Buy Bank OZK (OZK) Stock to Earn Higher Dividend?
Earlier this week, Bank OZK (OZK - Free Report) announced a dividend hike yet again. The company declared a quarterly cash dividend of 33 cents per share, reflecting a rise of 3.1% from the prior payout. The dividend will be paid out on Oct 21 to shareholders of record as of Oct 14.
This marks the 49th consecutive quarter of dividend hike by Bank OZK. Prior to this, the company hiked its dividend by 3.2% to 32 cents per share in July 2022.
Considering the last day’s closing price of $42.34, Bank OZK’s dividend yield currently stands at 3.02%, which is impressive compared with the industry average of 2.27%. Not only is the yield attractive for income investors but it also represents a steady income stream.
Bank OZK Dividend Yield (TTM)
Bank OZK dividend-yield-ttm | Bank OZK Quote
Further, OZK has raised its quarterly dividend 21 times in the last five years. Also, it has a five-year annualized dividend growth of 12.1%. Currently, the company's payout ratio is 29% of earnings.
The company has a share buyback program in place too. As of Jun 30, 2022, $177.6 million worth of shares were left to be repurchased. The plan is set to expire on Nov 4, 2022.
Bank OZK boasts a solid balance sheet. 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.
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. Because of Bank OZK’s track record of raising quarterly dividend, it has been part of the S&P High Yield Dividend Aristocrats index since 2018.
But before we can decide whether to buy the stock or not, let’s check out the bank’s financial performance and fundamentals, which will help us understand its risks and rewards.
Bank OZK has witnessed earnings growth of 5.9% over the past three to five years. The company’s earnings are expected to grow almost 1% this year and 8.8% in 2023. Also, over the past month, the Zacks Consensus Estimate for the company’s 2022 earnings has been revised marginally upward. This shows that analysts are bullish regarding the company’s earnings growth potential.
OZK has grown substantially through de novo branching strategy and inorganically. Its revenues witnessed a CAGR of 9.4% over the last six years (2016-2021), mainly driven by steady loan growth and a rise in fee income. Bank OZK has been able to grow deposit balances as well. Over the five-year period ended 2021, deposits witnessed a CAGR of 4.1%. This has aided revenue growth and the positive trend is expected to continue in the near term.
With the Federal Reserve having already raised rates a few times this year, along with expectations of more such hikes in 2022, Bank OZK’s net interest margin is anticipated to improve further.
Further, the change in the operating backdrop in 2020 has led banks to realign their businesses per customer needs, with more emphasis on digitization. Likewise, Bank OZK evaluated its branch network and has exited from Alabama and South Carolina, while closing a few branches in Arkansas, Florida, Georgia and New York.
Shares of this Zacks Rank #1 (Strong Buy) firm have rallied 11.9% over the past three months compared with the industry’s growth of 0.8%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Image Source: Zacks Investment Research
However, persistently increasing expenses and the company's exposure to risky loans are near-term headwinds that make us apprehensive about the bank’s prospects.
Dividend Hikes by Other Finance Companies
Trinity Capital Inc. (TRIN - Free Report) has announced a hike in its quarterly dividend. TRIN’s board of directors declared a cash dividend of 60 cents per share for the third quarter. The dividend will be paid out on Oct 14 to shareholders of record as of Sep 30, 2022.
The amount declared by TRIN consists of a regular quarterly dividend of 45 cents per share and a supplemental cash dividend of 15 cents. The regular quarterly dividend of 45 cents indicates an increase of 3 cents or 7.1% from the prior quarter.
TriCo Bancshares (TCBK - Free Report) has hiked its quarterly cash dividend. The company’s board of directors announced a dividend of 30 cents per share, representing a hike of 20% from the prior payout. The dividend was paid out on Sep 23, 2022, to stockholders of record as of Sep 9.
Before the hike, TCBK announced a dividend increase of 13.6% in March 2021. The dividend was raised from 22 cents per share to 25 cents.