Will ServisFirst's 13.4% Dividend Hike Sustain Investor Confidence?

ServisFirst Bancshares, Inc. SFBS continues to demonstrate a disciplined capital distribution policy, supported by consistent dividend growth and liquidity strength. The company’s board of directors approved a quarterly dividend increase to 38 cents per share, representing a 13.4% hike from the prior payout. The enhanced dividend will be paid on Jan. 13, 2026, to shareholders of record as of Jan. 2, 2026.

Notably, the company has increased its dividend every year since 2014, reflecting a long-standing commitment to returning capital to shareholders. Prior to the latest move, the company raised its dividend by nearly 11.7% to 34 cents per share in December 2024. Over the past five years, SFBS has delivered an annualized dividend growth rate of 12.81%. Currently, its payout ratio stands at 28%, which allows ServisFirst to manage earnings volatility without constraining dividend growth. Based on yesterday's closing price of $74.76, its current dividend yield is 1.79%.

Dividend Yield

The company’s strong liquidity position further supports the sustainability of its capital distribution policy. As of Sept. 30, 2025, total debt, including federal funds purchased and other borrowings, stood at $1.55 billion, while cash and cash equivalents totaled $1.77 billion. With cash exceeding outstanding obligations, the bank is well positioned to maintain financial flexibility even in a weaker economic environment.

At the end of Sept. 30, 2025, the bank also remained well-capitalized. Its Tier 1 capital to average assets ratio was 10.01%, while the common equity tier 1 (CET1) capital to risk-weighted assets ratio stood at 11.49%. Meanwhile, Tier 1 capital to risk-weighted assets was 11.50%, and total capital to risk-weighted assets reached 12.91%, all above regulatory minimum requirements.

Overall, ServisFirst’s consistent dividend growth history, conservative payout ratio, strong liquidity and capital position suggest that the bank is well-positioned to sustain its dividend payouts over the long term.

How Do SFBS’s Peers Compare on Dividend Strength?

Comparatively, SFBS’s peers, such as Citizens Community Bancorp CZWI and Banner Corporation BANR, have been returning capital to shareholders through both dividends and share repurchases.

Citizens Community raised its annual dividend by 12.5% in January 2025 and currently offers a dividend yield of 1.95%. The company has increased its dividend five times over the past five years, with total payout growth of 11.77% during the period. Its payout ratio stands at 28%, indicating dividends are well supported by earnings. In addition, Citizens Community maintains an active share repurchase program, with around 363,000 shares remaining available for buybacks as of Sept. 30, 2025.

Similarly, Banner has continued to reward shareholders, though dividend growth has been more measured. The company raised its quarterly dividend by 4% to 50 cents per share in October 2025 and currently offers a dividend yield of 2.99%. Over the past five years, Banner has increased its dividend three times, with total payout growth of 4.5%. Its payout ratio stands at 35%. Banner also has a share repurchase program in place, with approximately 1.48 million shares remaining under its current authorization as of Sept. 30, 2025.

SFBS’s Price Performance and Zacks Rank

Over the past six months, shares of ServisFirst have rallied 3.4% compared with the industry’s growth of 13.2%.

Price Performance

Currently, the company carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research