MainStreet Bancshares (NASDAQ:MNSB) Will Pay A Dividend Of $0.10
The board of MainStreet Bancshares, Inc. (NASDAQ:MNSB) has announced that it will pay a dividend of $0.10 per share on the 14th of November. This means the annual payment will be 2.1% of the current stock price, which is lower than the industry average.
View our latest analysis for MainStreet Bancshares
MainStreet Bancshares' Dividend Forecasted To Be Well Covered By Earnings
While yield is important, another factor to consider about a company's dividend is whether the current payout levels are feasible.
MainStreet Bancshares has a short history of paying out dividends, with its current track record at only 2 years. Based on its last earnings report however, the payout ratio is at a comfortable 2.8%, meaning that MainStreet Bancshares may be able to sustain this dividend for future years if it continues on this earnings trend.
Looking forward, earnings per share is forecast to fall by 33.8% over the next year. But if the dividend continues along recent trends, we estimate the future payout ratio could be 16%, 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.
MainStreet Bancshares Doesn't Have A Long Payment History
The company has maintained a consistent dividend for a few years now, but we would like to see a longer track record before relying on it. Since 2021, the annual payment back then was $0.20, compared to the most recent full-year payment of $0.40. This works out to be a compound annual growth rate (CAGR) of approximately 41% a year over that time. It is always nice to see strong dividend growth, but with such a short payment history we wouldn't be inclined to rely on it until a longer track record can be developed.
The Dividend Looks Likely To Grow
Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. MainStreet Bancshares has seen EPS rising for the last five years, at 28% per annum. Rapid earnings growth and a low payout ratio suggest this company has been effectively reinvesting in its business. Should that continue, this company could have a bright future.
MainStreet Bancshares Looks Like A Great Dividend Stock
In summary, it is good to see that the dividend is staying consistent, and we don't think there is any reason to suspect this might change over the medium term. The company is generating plenty of cash, and the earnings also quite easily cover the distributions. We should point out that the earnings are expected to fall over the next 12 months, which won't be a problem if this doesn't become a trend, but could cause some turbulence in the next year. Taking this all into consideration, this looks like it could be a good dividend opportunity.
Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For example, we've identified 2 warning signs for MainStreet Bancshares (1 is potentially serious!) that you should be aware of before investing. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.
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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.
