Oak Valley Bancorp (NASDAQ:OVLY) Has Announced That It Will Be Increasing Its Dividend To $0.225
Oak Valley Bancorp (NASDAQ:OVLY) has announced that it will be increasing its periodic dividend on the 9th of February to $0.225, which will be 41% higher than last year's comparable payment amount of $0.16. Although the dividend is now higher, the yield is only 1.2%, which is below the industry average.
View our latest analysis for Oak Valley Bancorp
Oak Valley Bancorp's Dividend Forecasted To Be Well Covered By Earnings
It would be nice for the yield to be higher, but we should also check if higher levels of dividend payment would be sustainable.
Having distributed dividends for at least 10 years, Oak Valley Bancorp has a long history of paying out a part of its earnings to shareholders. While past data isn't a guarantee for the future, Oak Valley Bancorp's latest earnings report puts its payout ratio at 8.5%, showing that the company can pay out its dividends comfortably.
Looking forward, earnings per share could rise by 21.4% over the next year if the trend from the last few years continues. If the dividend continues along recent trends, we estimate the future payout ratio will be 9.0%, which is in the range that makes us comfortable with the sustainability of the dividend.
Oak Valley Bancorp Has A Solid Track Record
The company has an extended history of paying stable dividends. Since 2014, the annual payment back then was $0.10, compared to the most recent full-year payment of $0.32. This works out to be a compound annual growth rate (CAGR) of approximately 12% a year over that time. We can see that payments have shown some very nice upward momentum without faltering, which provides some reassurance that future payments will also be reliable.
The Dividend Looks Likely To Grow
The company's investors will be pleased to have been receiving dividend income for some time. We are encouraged to see that Oak Valley Bancorp has grown earnings per share at 21% per year over the past five years. Earnings per share is growing at a solid clip, and the payout ratio is low which we think is an ideal combination in a dividend stock as the company can quite easily raise the dividend in the future.
We Really Like Oak Valley Bancorp's Dividend
In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. All of these factors considered, we think this has solid potential as a dividend stock.
It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. However, there are other things to consider for investors when analysing stock performance. See if management have their own wealth at stake, by checking insider shareholdings in Oak Valley Bancorp stock. 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.
