Capital Bancorp (NASDAQ:CBNK) Is Increasing Its Dividend To $0.06
Capital Bancorp, Inc. (NASDAQ:CBNK) will increase its dividend from last year's comparable payment on the 24th of August to $0.06. Even though the dividend went up, the yield is still quite low at only 1.0%.
See our latest analysis for Capital Bancorp
Capital Bancorp's Payment Expected To Have Solid Earnings Coverage
The dividend yield is a little bit low, but sustainability of the payments is also an important part of evaluating an income stock.
Currently, Capital Bancorp does not yet have a history of paying dividends out, with this being its first year doing so. Based on Capital Bancorp's last earnings report however, the payout ratio is at a comfortable 6.8%, meaning that the company may be able to sustain this dividend for future years if it continues on this earnings trend.
Looking forward, earnings per share is forecast to rise by 1.3% over the next year. Assuming the dividend continues along recent trends, we think the future payout ratio could be 6.7% by next year, which is in a pretty sustainable range.
Capital Bancorp Doesn't Have A Long Payment History
It's not possible for us to make a backward looking judgement just based on a short payment history. This doesn't mean that the company can't pay a good dividend, but just that we want to wait until it can prove itself.
The Dividend Looks Likely To Grow
Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Capital Bancorp has seen EPS rising for the last five years, at 29% per annum. Rapid earnings growth and a low payout ratio suggest this company has been effectively reinvesting in its business. Should that continue, this company could have a bright future.
Capital Bancorp Looks Like A Great Dividend Stock
In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. Earnings are easily covering distributions, and the company is generating plenty of cash. All in all, this checks a lot of the boxes we look for when choosing an income stock.
Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. However, there are other things to consider for investors when analysing stock performance. See if management have their own wealth at stake, by checking insider shareholdings in Capital Bancorp stock. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.
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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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