IBERIABANK Corporation Offers 6% Dividend Yield on Series C Preferred Stock (IBKC)

The IBERIABANK Corporation (NASDAQ:IBKC) raised the quarterly dividend payout on its common stock 2.7% to boost its yield to 1.8%. However, the yield on the company’s Series C Preferred Stock currently exceeds 6%.

Prospective investors should be aware that the company announced a $0.4125 quarterly dividend on the outstanding shares of its 6.60% Fixed-to-Floating Non-Cumulative Perpetual Preferred Stock, Series C, par value $1.00 per share (Series C Preferred Stock) on March 20, 2018. The company’s 2.3 million depositary shares, issued in May 2016, represent a 1/400th ownership interest in one share of the Series C Preferred Stock.

The Series C Preferred shares trade under the IBKCO symbol on the NASDAQ Global Select Market exchange. The newly declared $0.4125 quarterly dividend per depositary share is equivalent to a $165 payout per share of Series C Preferred Stock outstanding and converts to an annualized distribution of $ 1.65 per depositary share for 2018.

The ex-dividend date for the bank’s common share will occur on March 28, 2018, with the pay date following approximately one month later, on April 27, 2018. However, the cash dividend for the C Series Preferred Stock shares will be distributed on the May 1, 2018, pay date to all shareholders of record prior to the April 13, 2018, ex-dividend date.

IBERIABANK Corporation (NASDAQ:IBKC)

Headquartered in Lafayette, Louisiana and founded in 1887, the IBERIABANK Corporation operates as the holding company for IBERIABANK, which provides commercial and retail banking products and services in the southeastern United States. In addition to standard demand deposit and time deposit accounts, cash management services, deposit and annuity products, as well as brokerage services, the company also provides various title insurance and loan closing services for residential and commercial customers. Also, the bank offers equity research, institutional sales and trading, corporate finance services, wealth management and trust advisory services to high net worth individuals, pension funds, corporations and trusts. As of December 31, 2017, the bank’s operations comprised of 228 branch offices, 24 title insurance offices, 68 mortgage representative offices, four wealth management locations and 1 loan production office in 32 major metropolitan statistical areas (MSAs) across 10 states in the U.S southeast, including Louisiana, Arkansas, Tennessee, Alabama, Texas, Florida, Georgia and South Carolina.

The company boosted the quarterly dividend on its common shares 2.7% from $0.37 in the previous period to the current $0.38 quarterly distribution. This new quarterly amount converts to a $1.52 annualized payout and yields 1.8%. The current yield is 8% below the bank’s own five-year average yield of 2.0%.

After distributing the same annual dividend amount for eight years between 2008 and 2015, the company has raised its annual dividend over the past three consecutive years at an average growth rate of 3.8%. Despite the eight years without annual dividend hikes, the bank enhanced its annual dividend distribution at an average growth rate of 6.3% per year over the past two decades. The current $1.52 annualized dividend for 2018 is 240% higher than the $0.448 annualized amount paid out in 1998.

Both yields exceed the 1.64% average yield of the Southeast Regional Banks market segment, but the C Series Preferred Stock’s current yield also outperforms the 3.73% simple average of the entire Financials sector by 62%. Additionally, the C Series Preferred Stock’s current yield is 167% above the 2.27% average yield of only dividend paying peers in the Southeast Regional Banks segment.

While the C Series Preferred Stock’s dividend outperformed the common stock’s dividend in terms of dividend amount and yield, the common stock’s share price performed much better over the past 12 months. The C Series Preferred Stock’s share price traded over the trailing 12 months in a narrow band between its 52-week high of $28.50 and its 52-week low of $26.25, which it reached on February 9, 2018. After the February low, the share price rose 3.5% and closed on March 20, 2018, at $27.25, which was virtually identical to the $27.22 share price from one year earlier.

The common stock’s share price declined 7.5% from $76.40 on March 21, 2017, to its 52-week low of $70.65 on November 11, 2017. However, immediately after bottoming out in November 2017, the share price reversed direction and increased 23% to achieve its 52-week high of $87.00 by January 26, 2018. After peaking in late January, the share price gave back some of its gains, dropped 5% and closed on March 20, 2018, at $82.60. This closing price was 8.1% higher than it was one year earlier and almost 17% above the 52-week low from early November 2017.

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