Old National Bancorp (NASDAQ:ONB) Boosts Dividend to $0.14

Old National Bancorp (NASDAQ: ONB), a leading regional bank, has announced an increase in its quarterly cash dividend to $0.14 per share. This move reflects the company's strong financial performance and commitment to returning value to shareholders. In this article, we will delve into the factors driving Old National's dividend growth, its impact on the stock price, and the bank's capital management strategy.

Old National Bancorp's dividend yield of 2.8% is competitive with other regional banks like PNC (2.7%) and Fifth Third (2.9%), but lower than the broader financial sector's average of 3.5%. However, ONB's consistent dividend growth and strong financial performance make it an attractive option for income-oriented investors.

The payout ratio of Old National Bancorp's dividend is relatively low, indicating its sustainability and attractiveness. Using the 2023 earnings data, ONB's EPS was $1.67. Thus, the payout ratio based on earnings is 0.084 ($0.14/$1.67), suggesting that the dividend is relatively low compared to earnings. Additionally, considering the 2023 cash flow per share of $2.03, the payout ratio based on cash flow is 0.069 ($0.14/$2.03), demonstrating that the dividend is well-covered by cash flow.

Old National Bancorp's dividend growth rate has trended positively over the past five and ten years. From 2014 to 2024, ONB's annual dividend per share grew at a compound annual growth rate (CAGR) of approximately 7.5%. In the past five years, the CAGR was around 6.5%. Analysts expect this trend to continue, with an average forecast of 5% annual dividend growth over the next five years.



The impact of Old National Bancorp's dividend on its stock price and overall valuation is significant. The dividend yield of approximately 2.8% is competitive with other dividend-paying stocks in the financial sector, such as JPMorgan Chase (JPM) and Bank of America (BAC), which have dividend yields of 2.5% and 1.8%, respectively. Additionally, ONB's low payout ratio of around 30% indicates that the company has a strong earnings base and can sustain its dividend payments.

In conclusion, Old National Bancorp's dividend announcement is a positive sign for the company's financial health and its commitment to returning value to shareholders. The dividend yield and payout ratio suggest that ONB's dividend is competitive with other dividend-paying stocks in the financial sector, and the company's consistent dividend history provides further reassurance for investors seeking income-generating investments. As Old National continues to manage its net interest margin and loan growth, investors can expect stable dividend payouts, barring any significant economic downturns.