Capital Bancorp (NASDAQ:CBNK) Will Pay A Dividend Of $0.06
Capital Bancorp, Inc. (NASDAQ:CBNK) has announced that it will pay a dividend of $0.06 per share on the 31st of May. The dividend yield is 1.5% based on this payment, which is a little bit low compared to the other companies in the industry.
View our latest analysis for Capital Bancorp
Capital Bancorp's Earnings Will Easily Cover The Distributions
It would be nice for the yield to be higher, but we should also check if higher levels of dividend payment would be sustainable.
Capital Bancorp is just starting to establish itself as being able to pay dividends to shareholders, given its short 2-year history of distributing earnings. While it has a shorter history of paying out dividends, Capital Bancorp's payout ratio of 6.1% is a great sign for current shareholders, as this means that earnings greatly cover dividends.
Looking forward, earnings per share is forecast to fall by 6.1% over the next year. But if the dividend continues along recent trends, we estimate the future payout ratio could be 8.8%, which we would consider to be quite comfortable looking forward, with most of the company's earnings left over to grow the business in the future.
Capital Bancorp Is Still Building Its Track Record
The dividend hasn't seen any major cuts in the past, but the company has only been paying a dividend for 2 years, which isn't that long in the grand scheme of things. Since 2021, the annual payment back then was $0.20, compared to the most recent full-year payment of $0.24. This works out to be a compound annual growth rate (CAGR) of approximately 9.5% a year over that time. The dividend has been growing as a reasonable rate, which we like. However, investors will probably want to see a longer track record before they consider Capital Bancorp to be a consistent dividend paying stock.
The Dividend Looks Likely To Grow
Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Capital Bancorp has impressed us by growing EPS at 34% per year over the past five years. Earnings per share is growing at a solid clip, and the payout ratio is low which we think is an ideal combination in a dividend stock as the company can quite easily raise the dividend in the future.
We Really Like Capital Bancorp's Dividend
In summary, it is good to see that the dividend is staying consistent, and we don't think there is any reason to suspect this might change over the medium term. The earnings easily cover the company's distributions, and the company is generating plenty of cash. However, it is worth noting that the earnings are expected to fall over the next year, which may not change the long term outlook, but could affect the dividend payment in the next 12 months. Taking this all into consideration, this looks like it could be a good dividend opportunity.
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. As an example, we've identified 1 warning sign for Capital Bancorp that you should be aware of before investing. 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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