Bank7 Corp.'s (NASDAQ:BSVN) investors are due to receive a payment of $0.12 per share on 7th of October. This means the annual payment will be 2.0% of the current stock price, which is lower than the industry average.
Bank7's Earnings Will Easily Cover The Distributions
Even a low dividend yield can be attractive if it is sustained for years on end.
Bank7 is just starting to establish itself as being able to pay dividends to shareholders, given its short 3-year history of distributing earnings. Despite the company's shorter dividend history however, calculating for its payout ratio of 17% shows that Bank7 is able to comfortably pay dividends.
Over the next year, EPS is forecast to expand by 13.7%. If the dividend continues on this path, the future payout ratio could be 9.4% by next year, which we think can be pretty sustainable going forward.
Bank7 Doesn't Have A Long Payment History
The dividend hasn't seen any major cuts in the past, but the company has only been paying a dividend for 3 years, which isn't that long in the grand scheme of things. The annual payment during the last 3 years was $0.40 in 2019, and the most recent fiscal year payment was $0.48. This implies that the company grew its distributions at a yearly rate of about 6.3% over that duration. Bank7 has a nice track record of dividend growth but we would wait until we see a longer track record before getting too confident.
Bank7 May Find It Hard To Grow The Dividend
Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Earnings has been rising at 3.7% per annum over the last five years, which admittedly is a bit slow. While EPS growth is quite low, Bank7 has the option to increase the payout ratio to return more cash to shareholders.
Our Thoughts On Bank7's Dividend
In summary, we are pleased with the dividend remaining consistent, and we think there is a good chance of this continuing in 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.
Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Taking the debate a bit further, we've identified 1 warning sign for Bank7 that investors need to be conscious of moving forward. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.
Join A Paid User Research Session
You’ll receive a US$30 Amazon Gift card for 1 hour of your time while helping us build better investing tools for the individual investors like yourself. Sign up here