Middlefield Banc (NASDAQ:MBCN) Is Paying Out A Dividend Of $0.20

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The board of Middlefield Banc Corp. (NASDAQ:MBCN) has announced that it will pay a dividend on the 15th of March, with investors receiving $0.20 per share. This means the dividend yield will be fairly typical at 3.0%.

Check out our latest analysis for Middlefield Banc

Middlefield Banc's Dividend Forecasted To Be Well Covered By Earnings

While it is always good to see a solid dividend yield, we should also consider whether the payment is feasible.

Having distributed dividends for at least 10 years, Middlefield Banc has a long history of paying out a part of its earnings to shareholders. Taking data from its last earnings report, calculating for the company's payout ratio shows 37%, which means that Middlefield Banc would be able to pay its last dividend without pressure on the balance sheet.

Looking forward, earnings per share is forecast to fall by 32.5% over the next 3 years. Fortunately, analysts forecast the future payout ratio to be 49% over the same time horizon, which is in the range that makes us comfortable with the sustainability of the dividend.

historic-dividend
historic-dividend

Middlefield Banc Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. Since 2014, the annual payment back then was $0.52, compared to the most recent full-year payment of $0.80. This implies that the company grew its distributions at a yearly rate of about 4.4% over that duration. Although we can't deny that the dividend has been remarkably stable in the past, the growth has been pretty muted.

The Dividend's Growth Prospects Are Limited

The company's investors will be pleased to have been receiving dividend income for some time. Earnings has been rising at 2.2% per annum over the last five years, which admittedly is a bit slow. If Middlefield Banc is struggling to find viable investments, it always has the option to increase its payout ratio to pay more to shareholders.

Middlefield Banc Looks Like A Great Dividend Stock

Overall, we think that this is a great income investment, and we think that maintaining the dividend this year may have been a conservative choice. The distributions are easily covered by earnings, and there is plenty of cash being generated as well. If earnings do fall over the next 12 months, the dividend could be buffeted a little bit, but we don't think it should cause too much of a problem in the long term. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For example, we've picked out 1 warning sign for Middlefield Banc that investors should know about before committing capital to this stock. Is Middlefield Banc 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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