MidWestOne Financial Group (NASDAQ:MOFG) Has Announced That It Will Be Increasing Its Dividend To $0.2425

The board of MidWestOne Financial Group, Inc. (NASDAQ:MOFG) has announced that it will be paying its dividend of $0.2425 on the 15th of September, an increased payment from last year's comparable dividend. This takes the annual payment to 4.0% of the current stock price, which is about average for the industry.

Check out our latest analysis for MidWestOne Financial Group

MidWestOne Financial Group's Dividend Forecasted To Be Well Covered By Earnings

While it is always good to see a solid dividend yield, we should also consider whether the payment is feasible.

MidWestOne Financial Group has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. Based on MidWestOne Financial Group's last earnings report, the payout ratio is at a decent 35%, meaning that the company is able to pay out its dividend with a bit of room to spare.

EPS is set to fall by 0.4% over the next 12 months. But if the dividend continues along the path it has been on recently, we estimate the future payout ratio could be 38%, which would be comfortable for the company to continue in the future.

MidWestOne Financial Group Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. Since 2013, the annual payment back then was $0.38, compared to the most recent full-year payment of $0.97. This implies that the company grew its distributions at a yearly rate of about 9.8% over that duration. Dividends have grown at a reasonable rate over this period, and without any major cuts in the payment over time, we think this is an attractive combination as it provides a nice boost to shareholder returns.

The Dividend Looks Likely To Grow

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. We are encouraged to see that MidWestOne Financial Group has grown earnings per share at 10% per year over the past five years. MidWestOne Financial Group definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

We Really Like MidWestOne Financial Group's Dividend

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. The distributions are easily covered by earnings, and there is plenty of cash being generated as well. However, it is worth noting that the earnings are expected to fall over the next year, which may not change the long term outlook, but could affect the dividend payment in the next 12 months. Taking this all into consideration, this looks like it could be a good dividend opportunity.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For example, we've picked out 1 warning sign for MidWestOne Financial Group that investors should know about before committing capital to this stock. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.