Community West Bancshares (NASDAQ:CWBC) Is Paying Out A Larger Dividend Than Last Year
Community West Bancshares' (NASDAQ:CWBC) dividend will be increasing from last year's payment of the same period to $0.08 on 28th of February. Even though the dividend went up, the yield is still quite low at only 2.2%.
Check out our latest analysis for Community West Bancshares
Community West Bancshares' Dividend Forecasted To Be Well Covered By Earnings
It would be nice for the yield to be higher, but we should also check if higher levels of dividend payment would be sustainable.
Having paid out dividends for 8 years, Community West Bancshares has a good history of paying out a part of its earnings to shareholders. While past records don't necessarily translate into future results, the company's payout ratio of 19% also shows that Community West Bancshares is able to comfortably pay dividends.
Over the next 3 years, EPS is forecast to expand by 13.7%. Analysts forecast the future payout ratio could be 18% over the same time horizon, which is a number we think the company can maintain.
Community West Bancshares Is Still Building Its Track Record
It is great to see that Community West Bancshares has been paying a stable dividend for a number of years now, however we want to be a bit cautious about whether this will remain true through a full economic cycle. Since 2015, the annual payment back then was $0.08, compared to the most recent full-year payment of $0.32. This works out to be a compound annual growth rate (CAGR) of approximately 19% a year over that time. Community West Bancshares 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.
The Dividend Looks Likely To Grow
Investors could be attracted to the stock based on the quality of its payment history. We are encouraged to see that Community West Bancshares has grown earnings per share at 21% per year over the past five years. Earnings have been growing rapidly, and with a low payout ratio we think that the company could turn out to be a great dividend stock.
We Really Like Community West Bancshares' Dividend
Overall, a dividend increase is always good, and we think that Community West Bancshares is a strong income stock thanks to its track record and growing earnings. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. 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. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Taking the debate a bit further, we've identified 1 warning sign for Community West Bancshares that investors need to be conscious of moving forward. Is Community West Bancshares 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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