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Bank of the James Financial Group, Inc. (NASDAQ:BOTJ) will pay a dividend of US$0.07 on the 17th of September. This payment means the dividend yield will be 1.7%, which is below the average for the industry.
Bank of the James Financial Group's Earnings Easily Cover the Distributions
While yield is important, another factor to consider about a company's dividend is whether the current payout levels are feasible. Before making this announcement, Bank of the James Financial Group was easily earning enough to cover the dividend. This means that most of what the business earns is being used to help it grow.
Over the next year, EPS could expand by 6.3% if recent trends continue. If the dividend continues along recent trends, we estimate the payout ratio will be 23%, which is in the range that makes us comfortable with the sustainability of the dividend.
Bank of the James Financial Group Doesn't Have A Long Payment History
Bank of the James Financial Group's dividend has been pretty stable for a little while now, but we will continue to be cautious until it has been demonstrated for a few more years. The first annual payment during the last 7 years was US$0.18 in 2014, and the most recent fiscal year payment was US$0.25. This means that it has been growing its distributions at 4.9% per annum over that time. It's good to see at least some dividend growth. Yet with a relatively short dividend paying history, we wouldn't want to depend on this dividend too heavily.
Bank of the James Financial Group Could Grow Its Dividend
Investors could be attracted to the stock based on the quality of its payment history. Bank of the James Financial Group has seen EPS rising for the last five years, at 6.3% per annum. Growth in EPS bodes well for the dividend, as does the low payout ratio that the company is currently reporting.
Overall, a consistent dividend is a good thing, and we think that Bank of the James Financial Group has the ability to continue this into the future. The dividend has been at reasonable levels historically, but that hasn't translated into a consistent payment. The dividend looks okay, but there have been some issues in the past, so we would be a little bit cautious.
It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For instance, we've picked out 2 warning signs for Bank of the James Financial Group that investors should take into consideration. If you are a dividend investor, you might also want to look at our curated list of high performing dividend stock.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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