Thursday, March 29, 2012

Southside Bancshares Increases Dividend

Today Southside Bancshares (SBSI) announced it has increased its quarterly dividend 16.7%.  Actually it made two announcements, the first is that a 21 for 20 stock split is coming.  This will increase shares by 5% but lower the current quarterly dividend from $.18 to $.1714.  However in a second announcement the quarterly dividend was raised to $.20 per quarter representing 16.7% dividend growth. 

Right now my 60 shares pay me $43.20/year which will turn into 63 shares paying me $50.40/year

SBSI is small bank located in Texas.  It has an awesome dividend policy including regular dividend increases (17 straight years), stock dividends (stock splits) and special dividends to boot.  Annually SBSI rewards shareholders with 5% stock split, but keeps the quarterly dividend the same.  Its really just a phantom dividend increase of exactly 5%.  Using today (and history) as evidence, SBSI is a company which rewards shareholders handsomely.   I will add to my position on dips.


  1. Looks compelling! I'll have to take a solid look at this one. First, what do you think about it's debt load? Second, do you find any fear in investing in such a small bank?

    Unrelated, what do you think of some of the bigger banks like WFC and USB? Seems like they are on the cusp of a major turnaround. Could be a good time to get in on the upswing, but although they are raising the dividends again...the growth history isn't yet there after the divi cuts.

    SBSI looks very interesting.

  2. DM,

    #1 It holds a fairly high debt load. Here are some comparison numbers of Total Debt/Equity I calculated myself off the most recent balance sheets: SBSI - 11.76, JPM - 11.34, USB - 9.01, WFC - 8.36. So yes it is higher than other banks, but I'm not convinced looking at debt for banks is useful in the first place. Another fact: debt is increasing. Personally I don't mind if companies are taking on additional debt right now. Interest rates are pretty much the lowest ever. Other companies I own such as PM are taking advantage of it too.

    #2 Yes and No. SBSI is a small cap stock with a mkt cap of only ~360M. I have owned small banks for a while. The first one I owned, CIZN, failed to raise its dividend so I sold it. This was right before I started blogging. I had a large position with CIZN, but learned a lesson and decided to make SBSI a smallish position. So No I'm not scared of small banks, but I don't want them to be as large of positions as say PM or PG.

    I'm going to completely stay away from large American banks such as WFC and JPM. I like Canadian banks however.

    SBSI is close to its 52 week high right now and I'm not convinced I'll see massive capital appreciation. I do think the stock is interesting and the dividend policy is awesome. I will probably buy more shares, but hope to find a better price. It would be fun to buy another chunk before the stock splits.

    Thanks for stopping by,