Glen Burnie Bancorp's (NASDAQ:GLBZ) Dividend Will Be $0.10
The board of Glen Burnie Bancorp (NASDAQ:GLBZ) has announced that it will pay a dividend of $0.10 per share on the 5th of February. The dividend yield will be 6.0% based on this payment which is still above the industry average.
See our latest analysis for Glen Burnie Bancorp
Glen Burnie 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 distributed dividends for at least 10 years, Glen Burnie Bancorp has a long history of paying out a part of its earnings to shareholders. Based on Glen Burnie Bancorp's last earnings report, the payout ratio is at a decent 55%, meaning that the company is able to pay out its dividend with a bit of room to spare.
If the trend of the last few years continues, EPS will grow by 14.9% over the next 12 months. If the dividend continues on this path, the future payout ratio could be 48% by next year, which we think can be pretty sustainable going forward.
Dividend Volatility
Although the company has a long dividend history, it has been cut at least once in the last 10 years. The most recent annual payment of $0.40 is about the same as the annual payment 10 years ago. Modest growth in the dividend is good to see, but we think this is offset by historical cuts to the payments. It is hard to live on a dividend income if the company's earnings are not consistent.
The Dividend Looks Likely To Grow
Given that the dividend has been cut in the past, we need to check if earnings are growing and if that might lead to stronger dividends in the future. We are encouraged to see that Glen Burnie Bancorp has grown earnings per share at 15% per year over the past five years. Since earnings per share is growing at an acceptable rate, and the payout policy is balanced, we think the company is positioning itself well to grow earnings and dividends in the future.
We Really Like Glen Burnie Bancorp's Dividend
Overall, we like to see the dividend staying consistent, and we think Glen Burnie Bancorp might even raise payments in the future. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All in all, this checks a lot of the boxes we look for when choosing an income stock.
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. Taking the debate a bit further, we've identified 2 warning signs for Glen Burnie Bancorp that investors need to be conscious of moving forward. Is Glen Burnie 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.
