SmartFinancial, Inc.'s (NYSE:SMBK) investors are due to receive a payment of $0.08 per share on 27th of November. This payment means the dividend yield will be 1.0%, which is below the average for the industry.

View our latest analysis for SmartFinancial

SmartFinancial's Earnings Will Easily Cover The Distributions

It would be nice for the yield to be higher, but we should also check if higher levels of dividend payment would be sustainable.

Having paid out dividends for 5 years, SmartFinancial has a good history of paying out a part of its earnings to shareholders. Using data from its latest earnings report, SmartFinancial's payout ratio sits at 4.1%, an extremely comfortable number that shows that it can pay its dividend.

The next 3 years are set to see EPS grow by 52.7%. Analysts estimate the future payout ratio will be 14% over the same time period, which is in the range that makes us comfortable with the sustainability of the dividend.

SmartFinancial Is Still Building Its Track Record

Even though the company has been paying a consistent dividend for a while, we would like to see a few more years before we feel comfortable relying on it. The dividend has gone from an annual total of $0.20 in 2019 to the most recent total annual payment of $0.32. This works out to be a compound annual growth rate (CAGR) of approximately 9.9% a year over that time. Investors will likely want to see a longer track record of growth before making decision to add this to their income portfolio.

Dividend Growth May Be Hard To Achieve

Investors could be attracted to the stock based on the quality of its payment history. However, SmartFinancial's EPS was effectively flat over the past five years, which could stop the company from paying more every year. If SmartFinancial is struggling to find viable investments, it always has the option to increase its payout ratio to pay more to shareholders.

In Summary

Overall, we think SmartFinancial is a solid choice as a dividend stock, even though the dividend wasn't raised this year. The payout ratio looks good, but unfortunately the company's dividend track record isn't stellar. The dividend looks okay, but there have been some issues in the past, so we would be a little bit cautious.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Earnings growth generally bodes well for the future value of company dividend payments. See if the 6 SmartFinancial analysts we track are forecasting continued growth with our free report on analyst estimates for the company. Is SmartFinancial not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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