The board of Hawthorn Bancshares, Inc. (NASDAQ:HWBK) has announced that it will pay a dividend of $0.17 per share on the 1st of July. This means the dividend yield will be fairly typical at 3.1%.

Check out our latest analysis for Hawthorn Bancshares

Hawthorn Bancshares' Dividend Forecasted To Be Well Covered By Earnings

We aren't too impressed by dividend yields unless they can be sustained over time.

Hawthorn Bancshares has a long history of paying out dividends, with its current track record at a minimum of 10 years. While past records don't necessarily translate into future results, the company's payout ratio of 20% also shows that Hawthorn Bancshares is able to comfortably pay dividends.

Over the next year, EPS could expand by 39.8% if recent trends continue. Assuming the dividend continues along recent trends, we think the future payout ratio could be 23% by next year, which is in a pretty sustainable range.

Hawthorn Bancshares Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. The annual payment during the last 10 years was $0.13 in 2013, and the most recent fiscal year payment was $0.68. This works out to be a compound annual growth rate (CAGR) of approximately 18% a year over that time. So, dividends have been growing pretty quickly, and even more impressively, they haven't experienced any notable falls during this period.

The Dividend Looks Likely To Grow

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Hawthorn Bancshares has seen EPS rising for the last five years, at 40% per annum. Earnings per share is growing at a solid clip, and the payout ratio is low which we think is an ideal combination in a dividend stock as the company can quite easily raise the dividend in the future.

We Really Like Hawthorn Bancshares' Dividend

Overall, we like to see the dividend staying consistent, and we think Hawthorn Bancshares might even raise payments in the future. Earnings are easily covering distributions, and the company is generating plenty of cash. 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. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. See if management have their own wealth at stake, by checking insider shareholdings in Hawthorn Bancshares stock. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

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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.

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