Boston, MA 09/24/2014 (wallstreetpr) – A bank holding company, Southern Michigan Bancorp (OTCMKTS:SOC) said that its Board of Directors has given its permission to declare a dividend of 15 cents a share to all the shareholders. However, it was still short of five cents a share from the 20 cents a share paid before the financial crisis in 2008. As a result of the crisis, the company was maintaining a dividend of five cents a share for close to three years. Since the dividend increase happened only in the last two years, its three-year average dividend growth rate is much faster than the five-year average dividend growth rate.
Dividend Payment
The company’s statement said that the dividend would be paid to all the qualified shareholders, whose name appears in the record book of the company as on October 10. The dividend would work out to 60 cents a share on an annualized basis. Southern Michigan Bancorp (OTCMKTS:SOMC) has set October 24 as the deadline for paying a dividend to all the shareholders. The stock would go ex-dividend from October 8.
The present dividend provides a yield of 3.00%, which was higher than the dividend yield 2.20% for the five-year average period. Since the company started increasing the dividend consecutively only during the last two years, the five-year-average looked below the latest one.
Similarly, the latest dividend payout ratio worked out to 29.00%, which was also higher than the five-year average dividend payout ratio of 20.0%.
Growth Rate And History
The latest dividend presented an average three-year dividend growth of 40.24%, which was sharply higher than the average five-year dividend growth rate of 12.14%. Though Southern Michigan Bancorp (OTCMKTS:SOMC) has been paying a dividend since 1996, there was not much an increase in the dividend rate.
For instance, between 2009 and 2011, Southern Michigan has paid a quarterly dividend of five cents a share only. In 2008, it paid a dividend of 20 cents a share, which was increased from 18 cents a share. It was only in 2012, Southern Michigan Bancorp (OTCMKTS:SOMC) lifted its dividend rate to nine cents a share and to 12 cents a share in 2013. Currently, it is paying 15 cents a share.
