Last update on 2024-06-27

Great Southern Bancorp (GSBC) - Dividend Analysis (Final Score: 6/8)

Explore Great Southern Bancorp's (GSBC) dividend analysis with 6/8 stability score, revealing coverage by earnings and cash flow, and concerns over declining yield.

Short Analysis - Dividend Score: 6

We're running Great Southern Bancorp (GSBC) against the 8-criteria scoring system to evaluate the performance and stability of a company's dividend policy.

Great Southern Bancorp (GSBC) was evaluated on an 8-criteria scoring system to judge the sustainability and performance of its dividend policy. The company's dividend yield is below the industry average, which may be a concern for investors seeking high income. Its average annual dividend growth rate is higher than 5%, though volatile, showing potential yet unpredictable income growth. The average payout ratio over the last 20 years is well below 65%, highlighting prudent profit retention. Dividends have generally been covered by earnings and cash flow, though there are fluctuations and recent concerns over sustainability. The company has paid dividends for over 25 years, evidencing a strong commitment to shareholder returns. However, stability has been an issue with notable drops in some years. Lastly, GSBC has engaged in consistent stock repurchases, enhancing shareholder value.

Insights for Value Investors Seeking Stable Income

While GSBC shows strong long-term commitment to paying dividends and has a prudent payout ratio, the declining dividend yield relative to the industry and recent dividend coverage concerns could make it less attractive for conservative, income-focused investors. The stock's historical volatility in dividend growth might also be a deterrent. Investors looking for stable and predictable income streams should approach with caution. Nevertheless, for those who value long-term growth potential and have a higher risk tolerance, GSBC could be worth further consideration.

For those who are interested in delving deeper into the specifics, the subsequent section provides a comprehensive exploration of the criteria.

Dividend Yield Higher than the Industry Average?

Dividend yield measures the annual dividends paid by a company as a percentage of its stock price. It's a significant indicator for income-focused investors.

Great Southern Bancorp (GSBC) currently has a dividend yield of 2.0219%, which is lower than the industry's average of 2.76%. Historically, GSBC's dividend yield has fluctuated significantly, especially during periods of economic stress such as the financial crisis in 2008, when the yield spiked to 6.2937%. The recent yield is declining from a high of 4.8262% in 2020 to 2.0219% in 2023, which might be concerning for dividend investors. The recent decline in yield suggests that despite consistent dividends per share, increasing stock prices are outpacing dividend growth rates, diminishing the overall yield percentage. While the firm has shown resilience in maintaining and even slightly increasing its dividend payouts over the years, the yield compression suggests that current stock valuations may be high relative to dividend payments. Compared to the broader industry trend which has seen a steady, although moderate increase, in yields, GSBC’s decreasing yield could mean it might not attract new income-focused investors as effectively as its peers in the near term. This trend is generally unfavorable for dividend-focused investment strategies considering the firm's decreasing comparative attractiveness on yield grounds.

Average annual Growth Rate higher than 5% in the last 20 years?

The Dividend Growth Rate over the last 20 years for Great Southern Bancorp (GSBC) is important as it reflects the company's ability to increase dividends consistently, which is crucial for evaluating long-term income potential.

An analysis of Great Southern Bancorp’s dividends over a span of 20 years reveals significant variability. Notably, the dividend growth rates exhibit considerable fluctuations year over year, including some years with no dividend payouts at all (e.g., from 2009 to 2011) and some with negative growth rates (such as -40.678 in 2021 and -23.0769 in 2023). Despite such variances, the average growth rate over the period is recorded at 8.02%, which exceeds the 5% criterion. Nevertheless, this average might obscure the underlying volatility in dividend payments. From an investment perspective, the dividend trend can be perceived as both encouraging and troubling. On one side, the long-term growth rate is favorable, showing a potential for significant income growth, but the inconsistent dividend history raises questions regarding predictability and reliability. A potential investor might appreciate the higher overall average but should exercise caution given the pronounced fluctuations and substantial negative growth years. Such volatility might deter conservative income-focused investors who prioritize steady income streams over larger, but less predictable, long-term gains.

Average annual Payout Ratio lower than 65% in the last 20 years?

The average payout ratio indicates what percentage of net income is distributed to shareholders in the form of dividends. Keeping this ratio below 65% ensures that the company retains enough profit to reinvest in its operations and grow.

Great Southern Bancorp (GSBC) has maintained an average payout ratio of 15.88% over the last 20 years. The payout ratio has a maximum value reaching up to 55.88% in 2020. This indicates that the company has been prudent with its dividend distributions, ensuring a healthy retention of profits for further investment and growth. Notably, 2008 shows a negative payout ratio due to net losses, and 2023 shows a 0% payout ratio, emphasizing the importance of considering overall financial health rather than isolated years. Overall, maintaining a consistently low payout ratio is good for the sustainability and growth of GSBC.

Dividends Well Covered by Earnings?

Dividends are well covered by the earnings.

For a company to sustain its dividend payments, the dividends should generally be covered well by the earnings. For GSBC, we can verify this by examining the ratio of Dividend per Share to Earning per Share over a period of years. The ratio indicates what proportion of earnings are paid out as dividends. A lower ratio generally suggests greater dividend sustainability and the potential for dividend growth. Great Southern Bancorp's earning per share (EPS) and dividend per share (DPS) history reveals that dividends have been systematically covered, albeit with fluctuations over the years. However, notable outliers warrant scrutiny: in 2008, the financial crisis caused a significant disruption as GSBC reported negative EPS while maintaining its dividend, leading to a ratio of -2.175. Conversely, in years like 2019 and 2020, the payout ratios increased significantly, and though still under control, they indicate heightened payout stress. Overall, while the company has managed its dividends reasonably well, closer examination of the latest values reveals that covering dividends with earnings in 2023 could become challenging, shown by the value dropping to zero for EPS amidst a dividend payout. This is concerning and suggests a potential review of the dividend policy might be necessary if maintaining sustainability is desired. Given these insights, this is a mixed trend with cautious outlook.

Dividends Well Covered by Cash Flow?

Dividends Well Covered by Cash Flow criterion evaluates whether a company's dividend payments are sufficiently supported by its free cash flow. This is crucial for sustainability and the potential for dividend growth.

Examining the period from 2003 to 2023, Great Southern Bancorp's (GSBC) coverage of dividends by free cash flow reveals fluctuating trends. The ratio seems generally low, indicating only a modest portion of free cash flow is used for dividends. Notably, some years like 2010 (0.235) and 2012 (0.110) show particularly low coverage, possibly indicating either high capital expenditures or suboptimal cash usage. In contrast, 2023 shows a higher ratio of 0.263, and 2020 drastically peaks at 0.887, suggesting improved free cash flow or reduced dividends. Overall, while the trend shows potential improvements, the low average of well below 1 indicates the need for closer observation to ensure sustainable dividend policies. The fluctuating trend can be seen as both a sign of adaptive financial strategy and a signal for caution regarding dividend stability.

Stable Dividends Since the Company Began Paying Dividends?

Stability in dividend payments, where the dividend per share did not drop by more than 20% over the past two decades, is of utmost importance for income-seeking investors.

Upon reviewing the historical dividend per share data for Great Southern Bancorp (GSBC) from 2003 to 2023, the observed values are as follows: [0.355, 0.44, 0.52, 0.6, 0.68, 0.72, 0.72, 0.72, 0.72, 0.72, 0.72, 0.8, 0.86, 0.88, 0.94, 1.2, 2.07, 2.36, 1.4, 1.56, 1.2]. A key observation is a significant drop between 2020 and 2021, from 2.36 to 1.4, representing a 40.68% decline. Nonetheless, aside few minor fluctuations, the overall trend reveals stabilization or gradual increases in dividend payments, which remained relatively unbroken for over a decade. Stability in dividends is vital for income-seeking investors as it offers a reliable stream of income. While the substantial reductions in 2021 could pose concerns, especially for conservative investors, the rebound in 2022 may mitigate some stress over sustainability. In conclusion, the overall dividend trend for GSBC can be viewed as relatively stable, though the 2021 drop stands out as an anomaly that needs careful consideration.

Dividends Paid for Over 25 Years?

Whether a company has paid dividends consistently over more than 25 years can be a strong indicator of financial stability and shareholder value. It demonstrates the company's ability to generate consistent earnings and its commitment to returning value to shareholders through various economic cycles.

Great Southern Bancorp (GSBC) has a stellar record of paying dividends over the past 25 years, as evidenced by the dividend per share values provided from 1998 to 2023. Thus, this longevity in dividend payments suggests a robust and reliable business model that has successfully navigated various market conditions. A closer look at the numbers reveals a general upward trend in dividends over the years, particularly notable after the mid-2000s. For example, dividends have increased from $0.2275 per share in 1998 to $1.2 per share in 2023. Although the dividends dipped slightly in 2021 ($1.4) compared to 2020 ($2.36), the fact that they rebounded somewhat in 2022 to $1.56 shows resilience. Consistent and increasing dividend payments over such a long period are a strong positive indicator for investors, suggesting that GSBC is committed to rewarding its shareholders. Overall, the trend is good and reflects well on the company's financial health.

Reliable Stock Repurchases Over the Past 20 Years?

Reliable stock repurchases over the past 20 years are vital as they indicate a company's commitment to returning value to shareholders and maintaining share price stability by reducing the number of outstanding shares.

Great Southern Bancorp has demonstrated frequent share repurchases across several years out of the last 20. The years showing reliability in repurchases include 2005, 2006, 2007, 2008, 2011, 2012, 2019, 2020, 2021, 2022, and 2023. The average repurchase rate of -5.4848% signifies a consistent strategy of reducing share count. For instance, from 2003 to 2007, the share count decreased from 13,868,468 to 13,627,442, following a stable pattern. The years 2019 to 2021 also show a marked reduction, contributing to long-term shareholder value. This reliance on repurchases reflects positively on the company’s financial health and stockholder consideration.