Eagle Bancorp Montana (NASDAQ:EBMT) Is Increasing Its Dividend To US$0.13
The board of Eagle Bancorp Montana, Inc. (NASDAQ:EBMT) has announced that it will be increasing its dividend on the 3rd of September to US$0.13. This takes the annual payment to 1.9% of the current stock price, which unfortunately is below what the industry is paying.
See our latest analysis for Eagle Bancorp Montana
Eagle Bancorp Montana's Payment Has Solid Earnings Coverage
It would be nice for the yield to be higher, but we should also check if higher levels of dividend payment would be sustainable. Prior to this announcement, Eagle Bancorp Montana's earnings easily covered the dividend, but free cash flows were negative. We think that cash flows should take priority over earnings, so this is definitely a worry for the dividend going forward.
EPS is set to fall by 13.0% over the next 12 months. If the dividend continues along the path it has been on recently, we estimate the payout ratio could be 17%, which is comfortable for the company to continue in the future.
Eagle Bancorp Montana Has A Solid Track Record
Even over a long history of paying dividends, the company's distributions have been remarkably stable. Since 2011, the first annual payment was US$0.28, compared to the most recent full-year payment of US$0.50. This means that it has been growing its distributions at 6.0% per annum over that time. The dividend has been growing very nicely for a number of years, and has given its shareholders some nice income in their portfolios.
The Dividend Looks Likely To Grow
The company's investors will be pleased to have been receiving dividend income for some time. Eagle Bancorp Montana has seen EPS rising for the last five years, at 27% per annum. 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.
Our Thoughts On Eagle Bancorp Montana's Dividend
Overall, we always like to see the dividend being raised, but we don't think Eagle Bancorp Montana will make a great income stock. While Eagle Bancorp Montana is earning enough to cover the payments, the cash flows are lacking. 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. However, there are other things to consider for investors when analysing stock performance. For example, we've picked out 1 warning sign for Eagle Bancorp Montana that investors should know about before committing capital to this stock. Looking for more high-yielding dividend ideas? Try our curated list of strong dividend payers.
This article by Simply Wall St is general in nature. 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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