Shore Bancshares (NASDAQ:SHBI) Is Paying Out A Dividend Of $0.12
Shore Bancshares, Inc. (NASDAQ:SHBI) will pay a dividend of $0.12 on the 31st of August. Based on this payment, the dividend yield will be 4.0%, which is fairly typical for the industry.
View our latest analysis for Shore Bancshares
Shore Bancshares' Dividend Forecasted To Be Well Covered By Earnings
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, Shore Bancshares has a good history of paying out a part of its earnings to shareholders. Based on Shore Bancshares' last earnings report, the payout ratio is at a decent 33%, meaning that the company is able to pay out its dividend with a bit of room to spare.
The next year is set to see EPS grow by 12.2%. If the dividend continues along recent trends, we estimate the future payout ratio will be 60%, which is in the range that makes us comfortable with the sustainability of the dividend.
Shore Bancshares Doesn't Have A Long Payment History
Shore Bancshares' 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. The dividend has gone from an annual total of $0.08 in 2015 to the most recent total annual payment of $0.48. This means that it has been growing its distributions at 25% 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's Growth Prospects Are Limited
The company's investors will be pleased to have been receiving dividend income for some time. Unfortunately things aren't as good as they seem. Unfortunately, Shore Bancshares' earnings per share has been essentially flat over the past five years, which means the dividend may not be increased each year.
We should note that Shore Bancshares has issued stock equal to 67% of shares outstanding. Regularly doing this can be detrimental - it's hard to grow dividends per share when new shares are regularly being created.
Our Thoughts On Shore Bancshares' Dividend
Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. The company hasn't been paying a very consistent dividend over time, despite only paying out a small portion of earnings. Overall, we don't think this company has the makings of a good income stock.
Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Just as an example, we've come across 2 warning signs for Shore Bancshares you should be aware of, and 1 of them is significant. 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.
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