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Bank OZK (OZK) Hikes Dividend: Is the Stock Worth Buying?
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Bank OZK (OZK - Free Report) has yet again announced a dividend hike. The company declared a quarterly cash dividend of 29 cents per share, reflecting a rise of 1.8% from the prior payout. The dividend will be paid out on Oct 22 to shareholders of record as of Oct 15.
This marks the 45th consecutive quarter of dividend hike by the company. Prior to this, Bank OZK hiked its dividend by 1.8% to 28.5 cents per share in July. We believe that such disbursements highlight the company’s operational strength and commitment toward enhancing shareholder wealth.
Considering the last day’s closing price of $43.88, Bank OZK’s dividend yield currently stands at 2.64%. Not only is the yield attractive for income investors but also it represents a steady income stream. Also, the yield is significantly impressive compared with the industry average of 1.65%.
While this favorable development makes Bank OZK stock attractive to investors, let’s check out whether it is worth considering based on the dividend income. Deeper research into the bank’s financial performance and fundamentals will help understand the risks and rewards.
Bank OZK boasts a solid balance sheet. As of Jun 30, 2021, the company had total debt worth $1.10 billion, and cash and cash equivalents of $1.42 billion. Its times-interest-earned ratio of 33.9 in second-quarter 2021 reflects a sequential improvement. Thus, given a robust liquidity position and decent earnings strength, Bank OZK’s capital deployment activities are likely to remain sustainable.
Also, Bank OZK’s operations are likely to lend support. Though revenues declined in 2019, the same witnessed a compound annual growth rate (CAGR) of 15.3% over the last six years (2015-2020), primarily backed by steady loan growth. Also, given a strong balance sheet position, the company is expected to keep expanding through strategic acquisitions. Further, it is evaluating its branch network and realigning business per customer needs, with more emphasis on digitization.
Bank OZK’s earnings are projected to grow 86.4% in 2021. Also, the Zacks Consensus Estimate for the company’s 2021 earnings has been revised marginally upward over the past 60 days. This shows that analysts are optimistic regarding the company’s earnings growth potential.
Lastly, 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 arguably the biggest enticement for investors. Such moves boost investors’ confidence in the stock.
Shares of this Zacks Rank #2 (Buy) bank have rallied 40.3% so far this year, outperforming the industry’s 38.1% growth.
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However, pressure on margins amid a low interest rate environment remains a major near-term concern for Bank OZK. Continuously increasing costs and the company's exposure to risky loans are other woes.
Other Banks Taking Similar Steps
Over the past few months, several banks have announced dividend hikes. TFS Financial Corporation’s (TFSL - Free Report) board approved a 0.9% increase in the company’s quarterly dividend to 28.25 cents per share. Spirit of Texas Bancshares, Inc. announced a 33.3% hike in dividend to 12 cents per share.
Riverview Bancorp, Inc. (RVSB - Free Report) has also increased regular quarterly cash dividend. The company announced a dividend of 5.5 cents per share, representing a 10% hike from the prior payout.
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Bank OZK (OZK) Hikes Dividend: Is the Stock Worth Buying?
Bank OZK (OZK - Free Report) has yet again announced a dividend hike. The company declared a quarterly cash dividend of 29 cents per share, reflecting a rise of 1.8% from the prior payout. The dividend will be paid out on Oct 22 to shareholders of record as of Oct 15.
This marks the 45th consecutive quarter of dividend hike by the company. Prior to this, Bank OZK hiked its dividend by 1.8% to 28.5 cents per share in July. We believe that such disbursements highlight the company’s operational strength and commitment toward enhancing shareholder wealth.
Considering the last day’s closing price of $43.88, Bank OZK’s dividend yield currently stands at 2.64%. Not only is the yield attractive for income investors but also it represents a steady income stream. Also, the yield is significantly impressive compared with the industry average of 1.65%.
While this favorable development makes Bank OZK stock attractive to investors, let’s check out whether it is worth considering based on the dividend income. Deeper research into the bank’s financial performance and fundamentals will help understand the risks and rewards.
Bank OZK boasts a solid balance sheet. As of Jun 30, 2021, the company had total debt worth $1.10 billion, and cash and cash equivalents of $1.42 billion. Its times-interest-earned ratio of 33.9 in second-quarter 2021 reflects a sequential improvement. Thus, given a robust liquidity position and decent earnings strength, Bank OZK’s capital deployment activities are likely to remain sustainable.
Also, Bank OZK’s operations are likely to lend support. Though revenues declined in 2019, the same witnessed a compound annual growth rate (CAGR) of 15.3% over the last six years (2015-2020), primarily backed by steady loan growth. Also, given a strong balance sheet position, the company is expected to keep expanding through strategic acquisitions. Further, it is evaluating its branch network and realigning business per customer needs, with more emphasis on digitization.
Bank OZK’s earnings are projected to grow 86.4% in 2021. Also, the Zacks Consensus Estimate for the company’s 2021 earnings has been revised marginally upward over the past 60 days. This shows that analysts are optimistic regarding the company’s earnings growth potential.
Lastly, 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 arguably the biggest enticement for investors. Such moves boost investors’ confidence in the stock.
Shares of this Zacks Rank #2 (Buy) bank have rallied 40.3% so far this year, outperforming the industry’s 38.1% growth.
However, pressure on margins amid a low interest rate environment remains a major near-term concern for Bank OZK. Continuously increasing costs and the company's exposure to risky loans are other woes.
Other Banks Taking Similar Steps
Over the past few months, several banks have announced dividend hikes. TFS Financial Corporation’s (TFSL - Free Report) board approved a 0.9% increase in the company’s quarterly dividend to 28.25 cents per share. Spirit of Texas Bancshares, Inc. announced a 33.3% hike in dividend to 12 cents per share.
Riverview Bancorp, Inc. (RVSB - Free Report) has also increased regular quarterly cash dividend. The company announced a dividend of 5.5 cents per share, representing a 10% hike from the prior payout.