Recent Posts From DIV-Net Members

National Bankshares Stock Analysis

National Bankshares, Inc. (NKSH) operates as the bank holding company for the National Bank of Blacksburg, which provides a range of retail and commercial banking services to individuals, businesses, non-profits, and local governments in Virginia. This dividend achiever has increased dividends on its common stock for 12 years in a row. The company’s last dividend increase was in May 2012 when the Board of Directors approved a 16.70% increase to 53 cents/share.I uncovered this hidden dividend star in my weekly review of dividend increases. Over the past decade this dividend growth stock has delivered an annualized total return of 12.30% to its shareholders.

The company has managed to deliver 6.60% in annual EPS growth since 2002. Analysts expect National Bankshares to earn $2.56 per share in 2012 and $2.49 per share in 2013. In comparison National Bankshares earned $2.54/share in 2011.
 The return on equity has been declining since hitting a high of 15% in 2003, although it has been stabilizing since 2007 - 2008. Rather than focus on absolute values for this indicator, I generally want to see at least a stable return on equity over time.
The annual dividend payment has increased by 8.20% per year over the past decade, which is higher than to the growth in EPS. The company pays semi-annual distributions to its shareholders.
An 8% growth in distributions translates into the dividend payment doubling every nine years. The current semi-annual payment is twice the amount of dividends paid 9 years ago. Between 2002 and 2004 the dividend payout ratio increased from 34% to 40%. Since 2005 however, this indicator has been flat around 40%. A lower payout is always a plus, since it leaves room for consistent dividend growth minimizing the impact of short-term fluctuations in earnings.
Currently, National Bankshares is attractively valued at 11.10 times earnings, yields 3.70% and has an adequately covered dividend. I would consider initiating a position in the stock subject to availability of funds.

 Full Disclosure: None

 Relevant Articles:

 - Build your own Berkshire with dividend paying stocks
Searching for Hidden Dividend Stars
Hingham Institution for Savings (HIFS) Dividend Stock Analysis
The right time to buy dividend stocks

This article was written by Dividend Growth Investor. If you enjoyed this article, please subscribe to my feed [RSS], or have future articles emailed to you [Email] or follow me on Twitter [Twitter].