The board of Community Trust Bancorp, Inc. (NASDAQ:CTBI) has announced that it will pay a dividend of $0.47 per share on the 1st of July. This means that the annual payment will be 3.9% of the current stock price, which is in line with the average for the industry.

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Community Trust Bancorp's Earnings Will Easily Cover The Distributions

Solid dividend yields are great, but they only really help us if the payment is sustainable.

Community Trust Bancorp has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. Taking data from its last earnings report, calculating for the company's payout ratio shows 39%, which means that Community Trust Bancorp would be able to pay its last dividend without pressure on the balance sheet.

The next year is set to see EPS grow by 6.6%. If the dividend continues along recent trends, we estimate the future payout ratio will be 39%, which is in the range that makes us comfortable with the sustainability of the dividend.

View our latest analysis for Community Trust Bancorp

Community Trust Bancorp Has A Solid Track Record

The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. Since 2015, the dividend has gone from $1.16 total annually to $1.88. This implies that the company grew its distributions at a yearly rate of about 4.9% over that duration. Although we can't deny that the dividend has been remarkably stable in the past, the growth has been pretty muted.

Community Trust Bancorp Could Grow Its Dividend

The company's investors will be pleased to have been receiving dividend income for some time. We are encouraged to see that Community Trust Bancorp has grown earnings per share at 8.5% per year over the past five years. Community Trust Bancorp definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

We Really Like Community Trust Bancorp's Dividend

Overall, we like to see the dividend staying consistent, and we think Community Trust Bancorp might even raise payments in the future. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All of these factors considered, we think this has solid potential as a dividend stock.

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. Companies that are growing earnings tend to be the best dividend stocks over the long term. See what the 3 analysts we track are forecasting for Community Trust Bancorp for free with public analyst estimates for the company. Is Community Trust Bancorp not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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