Independent Bank Corporation Offers 25% Quarterly Dividend Hike (IBCP)
By: Ned Piplovic,
Independent Bank Corporation (NASDAQ:IBCP) entered its fourth year of consecutive annual dividend increases with a 25% quarterly dividend hike and its new dividend amount yields 2.5%.
The company also has complemented this massive quarterly payout hike with an average annual dividend growth rate that exceeds 30% over the past four years. In addition to the steady and rising dividend income, shareholders’ assets appreciated by double-digit percentages over the past year and multiplied many-fold over the past five years.
The Independent Bank Corporation’s next ex-dividend date will occur on February 6, 2018, and the company will distribute the next dividend payout to its shareholders on February 15, 2018.
Independent Bank Corporation (NASDAQ:IBCP)
Founded in 1864 and based in Grand Rapids, Michigan, the Independent Bank Corporation operates as the bank holding company for Independent Bank, which provides various banking services to individuals and businesses in Michigan. The company also offers the customary checking and savings accounts, commercial lending, direct and indirect consumer financing, mortgage lending and safe deposit box services, as well as automatic teller machines and Internet and mobile banking services. Additionally, the bank provides title insurance and other insurance services and investment services, and it acquires payment plans used by consumers to purchase vehicle service contracts provided and administered by third parties. The company offers its services through approximately 70 branches, 1 drive-thru only facility and 12 loan production offices, and it operates 14 automated teller machines (ATMs).
The company hiked its quarterly dividend payout 25% from previous period’s $0.12 to the current quarter’s $0.15 payout. This new quarterly payout converts to a $0.60 annualized distribution amount and a 2.5% forward yield.
The bank’s current dividend yield is almost 40% below the 4.23% average yield of the entire Financial sector. However, real estate investment trusts (REITs) and master limited partnerships (MLPs) drive up the average of the yield of the financial sector because these entities distribute more than 90 of all earnings as dividends.
Compared to the 1.55% average yield of all the companies in the Midwest Regional Banks segment, IBCP’s 2.5% yield is 64% higher. Even after excluding from the segment the companies that do not pay dividends, IBCP’s yield is still 21% higher than the 2.1% average yield of all the dividend-paying banks in the Midwest Regional Banks market segment.
The company’s share price began its current trailing 12-month period by rising more than 12% between January 23, 2017, and April 26, 2017. However, after that brief rise, the share price reversed course and dropped nearly 17% over the subsequent five months. The share price fell to its 52-week low by September 8, 2017, before starting to rise again.
However, the share price rose quickly after its low in early September and recovered 83% of its losses by the end of the month to reach within $22.65, which was only 3% short of its late-April levels. After that quick upsurge, the share price slowed its growth and did not regain the remaining 7% of its losses until mid-December and then continued to rise until it reached its 52-week high of $24.05 on January 11, 2018. Since that peak, the share price has pulled back almost 2% and closed on January 22, 2018, at $20.75, which was 13.7% higher than one year earlier, 21.6% higher than the September bottom and an extraordinary 453% higher than it was five years prior.
The combination of the steadily rising dividend payouts and the company’s share price growth have provided excellent total returns for long-term shareholders and to recent investors alike. In the past 12 months, investors were rewarded with a 17.9% total return on their investment. Over the past three years, shareholders enjoyed a 97% total return. However, the shareholders that invested five years ago basked in a total return of nearly 530%, which was driven mostly by the five-fold asset appreciation over that period.
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Ned Piplovic is the assistant editor of website content at Eagle Financial Publications. He graduated from Columbia University with a Bachelor’s degree in Economics and Philosophy. Prior to joining Eagle, Ned spent 15 years in corporate operations and financial management. Ned writes for www.DividendInvestor.com and www.StockInvestor.com.