Last update on 2024-06-27

S&T Bancorp (STBA) - Dividend Analysis (Final Score: 5/8)

In-depth dividend analysis of S&T Bancorp (STBA), revealing key metrics, historical performance, and sustainability of dividends. Final Score: 5/8.

Short Analysis - Dividend Score: 5

We're running S&T Bancorp (STBA) against the 8-criteria scoring system to evaluate the performance and stability of a company's dividend policy.

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 difference in S&T Bancorp compared to industry average.

Let’s break down the figures. S&T Bancorp (STBA) currently has a dividend yield of 1.915%, whereas the industry average sits at 2.76%. Historically, S&T Bancorp has swung between higher and lower yields, peaking at 4.5089% in 2020 and reaching its lowest at 1.915% in 2023. For most years, the dividend yield of S&T Bancorp exceeded the industry average until recent years (2022 and 2023). This shift can be interpreted variously. First, the decreasing yield might deter dividend-seeking investors, hinting either at a relatively overvalued stock price or an adjustment in the financial strategy. Notably, the consistent dividends per share with sliding stock prices also paint a nuanced picture. To foster better yield, improved stock performance will be crucial. Therefore, the downward trend suggests reassessment of its investment attractiveness compared to broader opportunities in the sector.

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

The Dividend Growth Rate indicates the annualized rate at which the company's dividend payments have increased. A higher growth rate is important as it signifies the company's ability to generate increasing returns to shareholders over time.

Based on the Dividend Ratio data provided for S&T Bancorp (STBA) over the past 20 years, there are significant fluctuations. The levels of dividend per share grow inconsistently, with positive years exhibiting average to high growth. However, negative values and years with no dividends substantially impact the overall performance. Despite a few high-growth years (e.g., 2018), inconsistencies, including the large negative spikes in 2009 (−50.8065) and 2023 (−46.6667), negatively affect the average dividend ratio. Calculated, the Average Dividend Growth Rate is roughly 0.3533%, significantly lower than the 5% benchmark. This trend is concerning as it points to instability and inconsistency in dividend growth over the long term, resulting in underperformance against the desired benchmark of over 5% annual growth.

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

Evaluate if the average payout ratio for S&T Bancorp over the last 20 years is below 65% and why adhering to this criterion is crucial for long-term dividend stability.

The average payout ratio for S&T Bancorp (STBA) over the last 20 years stands at approximately 57.53%. This figure is comfortably below the 65% threshold. A lower payout ratio typically indicates a more sustainable dividend, as it suggests that the company is retaining a significant portion of its earnings to reinvest in the business or cushion against economic downturns. The notable outliers in 2009 and 2020, where the payout ratios soared to 212.17% and 207.99% respectively, were likely due to extraordinary circumstances such as financial crises or economic downturns. Despite these anomalies, the average payout ratio remains healthy, suggesting that S&T Bancorp's dividend payments are generally well-covered by their earnings. Hence, this trend is positive for investors seeking reliable dividends.

Dividends Well Covered by Earnings?

Assessing whether dividends are sufficiently covered by earnings is crucial in evaluating a company's financial health and sustainability of dividend payouts.

Analyzing the Dividend Per Share (DPS) and Earnings Per Share (EPS) for S&T Bancorp (STBA), we observe that the ratio of dividends covered by earnings fluctuates significantly over the years. A general rule of thumb is that a payout ratio (DPS/EPS) lower than 1, ideally around 0.4 to 0.6, suggests that dividends are well covered by earnings, providing a cushion for future payouts and reinvestments. The history of S&T Bancorp illustrates that in most years, the company maintained a payout ratio within a healthy range. For instance, in 2003 and 2004, the ratios were approximately 0.526 and 0.527, reflecting well-covered dividends. However, there are outliers, such as in 2009 and 2018, where the ratio spiked dramatically to 2.121 and 2.080 due to lower EPS, indicating dividends were not well-covered those years. Over the recent years, including 2022, the coverage ratio appears within acceptable ranges again (around 0.345), showing improvement in covering dividends by earnings. Nevertheless, the EPS in 2023 being zero and hence no dividend payout, signals a year of maybe unfavorable financial performance. Thus, while S&T Bancorp has generally maintained a healthy dividend coverage ration, monitoring future earnings will be vital to ensure continued dividend sustainability. This overall trend illustrates a good but occasionally volatile dividend coverage scenario.

Dividends Well Covered by Cash Flow?

Explanation of the criterion: Dividends Well Covered by Cash Flow for S&T Bancorp (STBA).

Analyzing the ratio of dividends covered by free cash flow from 2003 to 2023.

Stable Dividends Since the Company Began Paying Dividends?

Stable dividend payouts over a long period indicate financial health and reliability, especially crucial for income-seeking investors.

Over the last 20 years, S&T Bancorp (STBA) has shown stability in its dividend payouts, with few exceptions. The dividend per share has mostly shown an upward or stable trend, barring certain years, specifically in 2009 and 2023, when drops exceeded 40%. This decline could signal potential cash flow problems or strategic financial repositioning. Despite these, the general trend remains a testimony to the company’s enduring dividend strategy.

Dividends Paid for Over 25 Years?

Evaluating whether a company has paid dividends for over 25 years is vital to determine its commitment to shareholder returns and financial stability.

S&T Bancorp (STBA) has a dividend payment history that spans from 1998 to 2023, a total of 26 years. Over this period, the company has consistently paid dividends every year. This long-term commitment to returning value to shareholders is a positive sign of financial stability and prudent management. However, there was a noticeable dip in dividends in 2009 and again in recent years of 2009 and 2023. Though slight reductions can be seen, the overall upward trend in dividend payments, despite some short-term reductions, signals a generally positive outlook for dividend sustainability.

Reliable Stock Repurchases Over the Past 20 Years?

Reliable Stock Repurchases Over the Past 20 Years

S&T Bancorp (STBA) has experienced fluctuations in the number of shares outstanding over the last 20 years. From the available data, it appears the company consistently bought back shares in certain years, particularly 2005, 2006, 2007, 2019, 2021, and 2022. These share repurchases indicate periods when the management might have believed the stock was undervalued or had excess cash to return to shareholders. The average percentage change in the number of shares repurchased over the 20-year period is around -2.9733%, suggesting a moderate level of buyback activity. It's a favorable sign when companies repurchase shares consistently as it can indicate confidence in the firm's future prospects. However, noticed fluctuations, especially substantial decreases and subsequent increases (such as between 2009 and 2010, and major issuance noted from 2016 to 2020), raise questions about the consistency of this program. Overall, the trend is moderately positive given the years of consistent repurchases but must be cautiously viewed considering the periods of dilution.