From Rocky Brands, Inc. (NASDAQ: RCKY) Investors are expected to receive a payment of $ 0.14 per share on June 16. This payout means that the dividend yield will be 1.1%, which is close to the industry average.
While the dividend yield is important for income investors, it is also important to consider any significant change in the price of the shares, as it will generally outweigh any gains from distributions. Investors will be delighted to see that Rocky Brands’ stock price has risen 45% in the past 3 months, which is good for shareholders and may also explain a drop in dividend yield.
Check out our latest review for Rocky Brands
Rocky Brands payout provides strong earnings coverage
Unless the payments are sustainable, the dividend yield doesn’t mean too much. However, Rocky Brands’ profits easily cover the dividend. As a result, much of what she earned was reinvested in the business.
Looking ahead, earnings per share could increase by 38.2% over the next year if the trend of recent years continues. If the dividend continues according to recent trends, we estimate that the payout ratio will be 13%, which is within the range that makes us comfortable with the sustainability of the dividend.
Rocky Brands doesn’t have a long payment history
It’s great to see that Rocky Brands has been paying a stable dividend for a number of years now, but we want to be a little cautious about whether that will hold true throughout a full economic cycle. The first annual payment in the past 8 years was $ 0.40 in 2013, and the most recent year payment was $ 0.56. This means that the company has increased its distributions at an annual rate of approximately 4.3% during this time. Rocky Brands hasn’t paid a dividend for a very long time, so we still wouldn’t be excited about its record growth.
The dividend is expected to increase
Investors might be attracted to the stock depending on the quality of its payment history. We are encouraged to see that Rocky Brands has grown its earnings per share by 38% per year over the past five years. Rapid earnings growth and a low payout rate suggest that this company is effectively reinvesting in its business. If this continues, this business could have a bright future.
We really like the Rocky Brands dividend
In summary, it’s good to see that the dividend remains constant, and we don’t think there is any reason to suspect that this could change in the medium term. Profits easily cover distributions and the company generates a lot of cash. Overall, this checks many of the boxes we look for when choosing an income stock.
It is important to note that companies with a consistent dividend policy will generate greater investor confidence than those with an irregular policy. However, there are other things for investors to consider when analyzing the performance of stocks. Just as an example we have encountered 3 warning signs for Rocky Brands you need to be aware of this and one of them is potentially serious. If you are a dividend investor, you can also view our organized list of high performing dividend stocks.
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