The board of Southside Bancshares, Inc. (NYSE:SBSI) has announced that it will pay a dividend of $0.36 per share on the 5th of March. The dividend yield will be 4.3% based on this payment which is still above the industry average.

Southside Bancshares' Payment Expected To Have Solid Earnings Coverage

A big dividend yield for a few years doesn't mean much if it can't be sustained.

Southside Bancshares has a long history of paying out dividends, with its current track record at a minimum of 10 years. Past distributions do not necessarily guarantee future ones, but Southside Bancshares' payout ratio of 63% is a good sign as this means that earnings decently cover dividends.

Looking forward, EPS is forecast to rise by 64.1% over the next 3 years. The future payout ratio could be 45% over that time period, according to analyst estimates, which is a good look for the future of the dividend.

Southside Bancshares Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. Since 2016, the dividend has gone from $0.903 total annually to $1.44. This implies that the company grew its distributions at a yearly rate of about 4.8% over that duration. While the consistency in the dividend payments is impressive, we think the relatively slow rate of growth is less attractive.

Dividend Growth May Be Hard To Achieve

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. However, initial appearances might be deceiving. Unfortunately, Southside Bancshares' earnings per share has been essentially flat over the past five years, which means the dividend may not be increased each year.

Our Thoughts On Southside Bancshares' Dividend

Overall, a consistent dividend is a good thing, and we think that Southside Bancshares has the ability to continue this into the future. The earnings coverage is acceptable for now, but with earnings on the decline we would definitely keep an eye on the payout ratio. The dividend looks okay, but there have been some issues in the past, so we would be a little bit cautious.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. However, there are other things to consider for investors when analysing stock performance. Without at least some growth in earnings per share over time, the dividend will eventually come under pressure either from competition or inflation. Businesses can change though, and we think it would make sense to see what analysts are forecasting for the company. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

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.