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Bank OZK's 52-Quarter Dividend Streak: Unwavering Financial Commitment

Aug. 25, 2023 10:30 AM ETBank OZK (OZK)OZKAP16 Comments
IncomeBent Investments profile picture
IncomeBent Investments


  • Bank OZK, a regional bank, stands out in the financial sector with its resilience, value, and growth potential.
  • The bank's financial metrics, including a low P/E ratio and a 3.5% dividend yield, make it competitive within the industry.
  • The company combines strong leadership with responsible lending which makes it a compelling buy at these levels.

Bank OZK Headquarters

Bank OZK

In an era where stock market fluctuations are the norm rather than the exception, a keen investor's eye often seeks refuge in sectors and stocks that stand resilient amidst turmoil. However, resilience, in isolation, isn't enough. There must be inherent value, a promising story of

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IncomeBent Investments profile picture
I provide easy-to-digest insights on stocks and bonds. I am obsessed with growth stocks and cyclical plays, but I also provide analysis on Value opportunities where appropriate. I employ industry and fundamental analysis to give a clear picture of the opportunity over a reasonable timeframe. - MBA and over a decade as an investor and investment author. - My content is not geared to anyone's specific investment goals, time horizons, or risk tolerance. Content is for illustrative purposes only and is not intended to displace advice from a fee-based financial adviser. It is not to be taken as investment advice, or influence investor decision making. Accuracy of data is not guaranteed.

Analyst’s Disclosure: I/we have a beneficial long position in the shares of OZK either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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Comments (16)

thirdcamper profile picture
Anyone have a sense of why OZK has 11% short interest when it has no HTM securities and its income and earnings are improving?
Collecting my next dividend tomorrow. Also expecting huge option obligations to expire. Fun trading options across earnings when you know a bit about the Business! Huge yty consensus EPS and Revenue numbers tonight.

Thanks for the article.
When the market values a company based on it's industry (banking) rather than its performance (the company) an opportunity may exist. Rather than ask "what should the PE of a bank be", ask "what should the PE of a company growing at 17% annualized for past seven years be?" If you agree with the market the answer is a PE of 6.2 with 11% of the shares shorted. As Bob Uecker might say: "Juuusssttt a little outside" ;-)
“Net Interest Income: The bank reported an impressive $356.8M, comfortably outstripping the consensus $345.4M. For perspective, this is a significant leap from the $344.9M from the prior quarter and a massive jump from $265.8M in Q2 2022”

I’m curious how they had a 30% jump in nii when NIM getting squeezed with banks having to pay higher rates to attract capital
Since the begining of 2014, when the stock was priced at $31.75 with earnings of $1.20 and a PE of 26.4, OZK the company has grown earnings to the current $5.30, a CAGR of 16.9%. Dividends have increased steadily from $0.36 to $1.44, a CAGR of 15.7%. Meanwhile the price of OZK the stock has increased from $31.75 to today's $39.25, a CAGR of 2.3%. Do you see anything wrong with this picture?
@47484186 With a PE of 26.4 in 2014, the stock was priced much too high for a bank stock. Banks normally trade between 8-12 and so the price moved little as earnings grew over time and the PE fell to levels seen with most bank stocks. What was wrong with the picture has nothing to do with OZK, but everything to do with a market that overvalued its stock.
@tetnanger Yes, I completely agree that the market priced OZK like a growth stock, not a bank stock. And that it currently values it like a bank stock. However what the market forgot is that OZK the company, is actually a growth company increasing both earnings and dividends at more than twice the market rates.
It's also pricing it's debt (OZKAP) at nearly 40% off. We'll see.
@47484186 The thing is that it may have been growing then, but it was still a bank stock trading above the PE which is characteristic for the industry. Since bank stocks generally trade at a multiple between 8-12, as earnings went up, the price didn't keep pace and the PE fell to levels consistent with the industry norms. This is another example of reversion to the mean.
Long term holder and there is alot to like about them. I remember one item that stood out when I did my initial research.
Each asset manager handles 16 loans each, other banks it might be more than 100. Which is a big contributor to hem having a much lower net-charge off ratio than competitors.
Not sure this is still the case, but it just stood out to me as being very practical.
Tadpoles_UK profile picture
Thanx for the article.
I’m a long-term OZK owner. The bank regularly posts results that can’t be achieved by a vast majority of their competitors. In addition to the solid dividend growth, the shares offer a fine chance to earn extra income via covered call premiums.
During 2022, I sold about 15% of my holdings at $50. When the entire banking industry took a hit during the spring, that provided an opportunity to buy the 15% back at $35. It was no surprise that OZK did not suffer the bond losses and fleeing deposits that other banks did.
My only concern at this point is that 40-year CEO George Gleason is nearing 70 years old. At some point he will retire, and It’s unlikely that his eventual successor will perform as well.
Those looking for income might consider OZK's preferred, OZKAP, currently under $15 with a 7.8% yield.
farmed out profile picture
@tetnanger Indeed, but not just yet..... I want to add to my OZKAP position in the next few days at these cheaper levels!! 😃
BA Man profile picture
I’ve been adding a few shares virtually every week, using the dividends coming in from other companies. Almost 40% below the par value paired with the dividend could be setting up for a nice total return.
@BA Man I've been adding to other positions but when the price falls below 15 it's really tempting. Unfortunately, there not enough cash to buy everything in the candy store. The only downside with OZKAP is that it's perpetual and so the preferred will trade based solely on interest rates rather than a call date. Still... buying the preferred at about $15 with a ~7.5% yield locked in is a great way to create sleep at night passive retirement income.
Audit72 profile picture
Also interesting is the short duration of its investments - 3.6 years - very low risk of high losses during rising rates. OZK can easily afford to hold to maturity ($10B in liquidity). Many large banks have large unrealized losses in their investments.
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