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Macatawa Bank (NASDAQ:MCBC) Is Due To Pay A Dividend Of $0.08

Macatawa Bank Corporation's (NASDAQ:MCBC) investors are due to receive a payment of $0.08 per share on 25th of August. This means that the annual payment will be 3.3% of the current stock price, which is in line with the average for the industry.

See our latest analysis for Macatawa Bank

Macatawa Bank's Payment Expected To Have Solid Earnings Coverage

We like a dividend to be consistent over the long term, so checking whether it is sustainable is important.

Having paid out dividends for 8 years, Macatawa Bank has a good history of paying out a part of its earnings to shareholders. Past distributions do not necessarily guarantee future ones, but Macatawa Bank's payout ratio of 42% is a good sign for current shareholders as this means that earnings decently cover dividends.

The next year is set to see EPS grow by 12.7%. If the dividend continues along recent trends, we estimate the future payout ratio will be 44%, which is in the range that makes us comfortable with the sustainability of the dividend.

historic-dividend
historic-dividend

Macatawa Bank Doesn't Have A Long Payment History

Macatawa Bank'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 2014, the annual payment back then was $0.08, compared to the most recent full-year payment of $0.32. This means that it has been growing its distributions at 19% per annum over that time. The dividend has been growing rapidly, however with such a short payment history we can't know for sure if payment can continue to grow over the long term, so caution may be warranted.

The Dividend Has Growth Potential

Investors could be attracted to the stock based on the quality of its payment history. It's encouraging to see that Macatawa Bank has been growing its earnings per share at 7.5% a year over the past five years. Shareholders are getting plenty of the earnings returned to them, which combined with strong growth makes this quite appealing.

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. The dividend has been at reasonable levels historically, but that hasn't translated into a consistent payment. 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. As an example, we've identified 1 warning sign for Macatawa Bank that you should be aware of before investing. Is Macatawa Bank not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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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