Bank of the James Financial Group (NASDAQ:BOTJ) Could Be A Buy For Its Upcoming Dividend
Readers hoping to buy Bank of the James Financial Group, Inc. (NASDAQ:BOTJ) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. Ex-dividend means that investors that purchase the stock on or after the 4th of March will not receive this dividend, which will be paid on the 19th of March.
Bank of the James Financial Group's next dividend payment will be US$0.07 per share, and in the last 12 months, the company paid a total of US$0.28 per share. Last year's total dividend payments show that Bank of the James Financial Group has a trailing yield of 1.9% on the current share price of $14.79. If you buy this business for its dividend, you should have an idea of whether Bank of the James Financial Group's dividend is reliable and sustainable. As a result, readers should always check whether Bank of the James Financial Group has been able to grow its dividends, or if the dividend might be cut.
View our latest analysis for Bank of the James Financial Group
Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. Bank of the James Financial Group paid out just 24% of its profit last year, which we think is conservatively low and leaves plenty of margin for unexpected circumstances.
Companies that pay out less in dividends than they earn in profits generally have more sustainable dividends. The lower the payout ratio, the more wiggle room the business has before it could be forced to cut the dividend.
Have Earnings And Dividends Been Growing?
Stocks with flat earnings can still be attractive dividend payers, but it is important to be more conservative with your approach and demand a greater margin for safety when it comes to dividend sustainability. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. It's not encouraging to see that Bank of the James Financial Group's earnings are effectively flat over the past five years. It's better than seeing them drop, certainly, but over the long term, all of the best dividend stocks are able to meaningfully grow their earnings per share.
The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Since the start of our data, seven years ago, Bank of the James Financial Group has lifted its dividend by approximately 4.9% a year on average.
Final Takeaway
Is Bank of the James Financial Group worth buying for its dividend? Earnings per share have been flat in recent years, although Bank of the James Financial Group reinvests more than half its earnings in the business, which could suggest there are some growth projects that have not yet reached fruition. Overall, Bank of the James Financial Group looks like a promising dividend stock in this analysis, and we think it would be worth investigating further.
On that note, you'll want to research what risks Bank of the James Financial Group is facing. Every company has risks, and we've spotted 2 warning signs for Bank of the James Financial Group you should know about.
We wouldn't recommend just buying the first dividend stock you see, though. Here's a list of interesting dividend stocks with a greater than 2% yield and an upcoming dividend.
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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