Eagle Bancorp (NASDAQ:EGBN) Will Pay A Dividend Of $0.45
Eagle Bancorp, Inc. (NASDAQ:EGBN) will pay a dividend of $0.45 on the 28th of July. The dividend yield will be 7.7% based on this payment which is still above the industry average.
See our latest analysis for Eagle Bancorp
Eagle Bancorp's Earnings Will Easily Cover The Distributions
While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable.
Having paid out dividends for only 4 years, Eagle Bancorp does not have much of a history being a dividend paying company. Diving into the company's earnings report, the payout ratio is set at 48%, which is a decent ratio of dividend payout to earnings, and may sustain future dividends if the company stays at its current trend.
Over the next year, EPS is forecast to fall by 5.5%. But if the dividend continues along recent trends, we estimate the future payout ratio could be 66%, 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.
Eagle 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 4 years, which isn't that long in the grand scheme of things. The annual payment during the last 4 years was $0.88 in 2019, and the most recent fiscal year payment was $1.80. This means that it has been growing its distributions at 20% per annum over that time. We're not overly excited about the relatively short history of dividend payments, however the dividend is growing at a nice rate and we might take a closer look.
Dividend Growth May Be Hard To Achieve
The company's investors will be pleased to have been receiving dividend income for some time. Earnings has been rising at 4.1% per annum over the last five years, which admittedly is a bit slow. Growth of 4.1% per annum is not particularly high, which might explain why the company is paying out a higher proportion of earnings. This isn't bad in itself, but unless earnings growth pick up we wouldn't expect dividends to grow either.
Our Thoughts On Eagle Bancorp's Dividend
Overall, a consistent dividend is a good thing, and we think that Eagle Bancorp has the ability to continue this into 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.
Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Case in point: We've spotted 3 warning signs for Eagle Bancorp (of which 1 is significant!) you should know about. Is Eagle Bancorp 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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