Bank7 (NASDAQ:BSVN) Is Paying Out A Larger Dividend Than Last Year
Bank7 Corp.'s (NASDAQ:BSVN) dividend will be increasing from last year's payment of the same period to $0.16 on 7th of April. Although the dividend is now higher, the yield is only 1.8%, which is below the industry average.
View our latest analysis for Bank7
Bank7's Earnings Will Easily Cover The Distributions
If it is predictable over a long period, even low dividend yields can be attractive.
Bank7 is just starting to establish itself as being able to pay dividends to shareholders, given its short 3-year history of distributing earnings. Based on its last earnings report however, the payout ratio is at a comfortable 16%, meaning that Bank7 may be able to sustain this dividend for future years if it continues on this earnings trend.
Looking forward, EPS is forecast to rise by 26.4% over the next 3 years. The future payout ratio could be 18% over that time period, according to analyst estimates, which is a good look for the future of the dividend.
Bank7 Is Still Building Its Track Record
The dividend has been pretty stable looking back, but the company hasn't been paying one for very long. This makes it tough to judge how it would fare through a full economic cycle. Since 2020, the dividend has gone from $0.40 total annually to $0.48. This works out to be a compound annual growth rate (CAGR) of approximately 6.3% a year over that time. Bank7 has a nice track record of dividend growth but we would wait until we see a longer track record before getting too confident.
Dividend Growth May Be Hard To Achieve
Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Unfortunately things aren't as good as they seem. Although it's important to note that Bank7's earnings per share has basically not grown from where it was five years ago, which could erode the purchasing power of the dividend over time.
In Summary
In summary, while it's always good to see the dividend being raised, we don't think Bank7's payments are rock solid. The company hasn't been paying a very consistent dividend over time, despite only paying out a small portion of earnings. Overall, we don't think this company has the makings of a good income stock.
Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. As an example, we've identified 2 warning signs for Bank7 that you should be aware of before investing. Is Bank7 not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.
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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.
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