The Board of Old National Bancorp (NASDAQ:ONB) announced it will declare a dividend of $0.14 per share on September 16. This means the annual payment will be 2.9% of the current share price, which is in line with the industry average.

Check out our latest analysis for Old National Bancorp

Old National Bancorp dividend expected to be well covered by earnings

While a solid dividend yield is always pleasing, we should also consider whether the payment is feasible.

Old National Bancorp has paid dividends for at least 10 years and has a long history of paying out a portion of its earnings to shareholders. Past payouts are not necessarily a guarantee of future payouts, but Old National Bancorp’s payout ratio of 33% is a good sign because it means earnings are adequately covering dividends.

Over the next three years, earnings per share are expected to grow by 39.8%. Analysts expect the future payout ratio to be 27% over the same period, which is a range that makes us comfortable with the sustainability of the dividend.

Old National Bancorp has a solid track record

The company has a long history of paying dividends and they have been relatively stable, which gives us confidence in its future dividend potential. The dividend has increased from an annual total of $0.40 in 2014 to the most recent annual total payout of $0.56. This means that the company has increased its payouts by about 3.4% annually over that time. Slow and steady dividend growth may not sound that exciting, but dividends have been stable for ten years, which makes this offering quite attractive in our opinion.

Dividend growth could be difficult to achieve

Some investors will be eager to buy shares of the company given its dividend history. Earnings have grown 3.9% per year over the past five years, which is admittedly a bit slow. Although EPS growth is quite low, Old National Bancorp has the ability to increase its payout ratio to return more money to shareholders.

We really like Old National Bancorp’s dividend

Overall, we’d like to see the dividend stay consistent, and we think Old National Bancorp could even increase payments in the future. Earnings easily cover distributions, and the company generates a lot of cash. Taking all of this into account, it looks like this could be a good dividend opportunity.

It is important to note that companies with a consistent dividend policy generate more confidence among investors than those with an irregular one. However, despite the importance of dividend payments, they are not the only factors our readers should know when evaluating a company. For example, we have selected the following companies: 2 warning signs for Old National Bancorp investors should consider. Looking for more high yield dividend ideas? Try our Collection of strong dividend payers.

Do you have feedback on this article? Are you concerned about the content? Contact us directly from us. Alternatively, send an email to editorial-team (at) simplywallst.com.

This Simply Wall St article is of a general nature. We comment solely on the basis of historical data and analyst forecasts, using an unbiased methodology. Our articles do not constitute financial advice. It is not a recommendation to buy or sell any stock and does not take into account your objectives or financial situation. Our goal is to provide you with long-term analysis based on fundamental data. Note that our analysis may not take into account the latest price-sensitive company announcements or qualitative materials. Simply Wall St does not hold any of the stocks mentioned.