Colony Bankcorp (NASDAQ:CBAN) Is Due To Pay A Dividend Of $0.1075
The board of Colony Bankcorp, Inc. (NASDAQ:CBAN) has announced that it will pay a dividend of $0.1075 per share on the 20th of August. This means that the annual payment will be 3.0% of the current stock price, which is in line with the average for the industry.
Check out our latest analysis for Colony Bankcorp
Colony Bankcorp's Earnings Will Easily Cover The Distributions
We aren't too impressed by dividend yields unless they can be sustained over time.
Colony Bankcorp has established itself as a dividend paying company, given its 5-year history of distributing earnings to shareholders. Past distributions do not necessarily guarantee future ones, but Colony Bankcorp's payout ratio of 34% is a good sign for current shareholders as this means that earnings decently cover dividends.
Over the next 3 years, EPS is forecast to expand by 46.4%. The future payout ratio could be 25% over that time period, according to analyst estimates, which is a good look for the future of the dividend.
Colony Bankcorp Is Still Building Its Track Record
Colony Bankcorp's dividend has been pretty stable for a little while now, but we will continue to be cautious until it has been demonstrated for a few more years. Since 2017, the dividend has gone from $0.10 total annually to $0.428. This works out to be a compound annual growth rate (CAGR) of approximately 34% a year over that time. Colony Bankcorp has been growing its dividend quite rapidly, which is exciting. However, the short payment history makes us question whether this performance will persist across a full market cycle.
Dividend Growth May Be Hard To Achieve
Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Although it's important to note that Colony Bankcorp'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. Earnings growth is slow, but on the plus side, the dividend payout ratio is low and dividends could grow faster than earnings, if the company decides to increase its payout ratio.
We should note that Colony Bankcorp has issued stock equal to 82% of shares outstanding. Regularly doing this can be detrimental - it's hard to grow dividends per share when new shares are regularly being created.
In Summary
In summary, we are pleased with the dividend remaining consistent, and we think there is a good chance of this continuing in the future. While the payout ratios are a good sign, we are less enthusiastic about the company's dividend record. This looks like it could be a good dividend stock going forward, but we would note that the payout ratio has been at higher levels in the past so it could happen again.
Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. To that end, Colony Bankcorp has 2 warning signs (and 1 which is concerning) we think you should know about. 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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