U.S. markets closed
  • S&P Futures

    4,070.25
    -5.25 (-0.13%)
     
  • Dow Futures

    34,441.00
    -18.00 (-0.05%)
     
  • Nasdaq Futures

    11,991.75
    -18.50 (-0.15%)
     
  • Russell 2000 Futures

    1,894.00
    -0.40 (-0.02%)
     
  • Crude Oil

    81.42
    +1.44 (+1.80%)
     
  • Gold

    1,820.10
    +10.50 (+0.58%)
     
  • Silver

    23.56
    +0.31 (+1.33%)
     
  • EUR/USD

    1.0570
    +0.0039 (+0.37%)
     
  • 10-Yr Bond

    3.5060
    -0.0230 (-0.65%)
     
  • Vix

    19.06
    -0.78 (-3.93%)
     
  • GBP/USD

    1.2329
    +0.0032 (+0.26%)
     
  • USD/JPY

    134.3150
    +0.0440 (+0.03%)
     
  • BTC-USD

    17,258.76
    +275.34 (+1.62%)
     
  • CMC Crypto 200

    408.69
    +7.26 (+1.81%)
     
  • FTSE 100

    7,556.23
    -2.26 (-0.03%)
     
  • Nikkei 225

    27,808.19
    +30.29 (+0.11%)
     

United Security Bancshares (NASDAQ:UBFO) Has Announced A Dividend Of US$0.11

United Security Bancshares (NASDAQ:UBFO) has announced that it will pay a dividend of US$0.11 per share on the 22nd of July. This means the annual payment is 5.9% of the current stock price, which is above the average for the industry.

Check out our latest analysis for United Security Bancshares

United Security Bancshares' Earnings Easily Cover the Distributions

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. Prior to this announcement, United Security Bancshares' dividend was comfortably covered by both cash flow and earnings. This means that a large portion of its earnings are being retained to grow the business.

Looking forward, earnings per share could rise by 8.3% over the next year if the trend from the last few years continues. Assuming the dividend continues along recent trends, we think the payout ratio could be 75% by next year, which is in a pretty sustainable range.

historic-dividend
historic-dividend

United Security Bancshares Is Still Building Its Track Record

The dividend's track record has been pretty solid, but with only 5 years of history we want to see a few more years of history before making any solid conclusions. Since 2017, the dividend has gone from US$0.20 to US$0.44. This works out to be a compound annual growth rate (CAGR) of approximately 17% 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.

We Could See United Security Bancshares' Dividend Growing

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. United Security Bancshares has seen EPS rising for the last five years, at 8.3% per annum. Earnings are on the uptrend, and it is only paying a small portion of those earnings to shareholders.

We Really Like United Security Bancshares' Dividend

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. Earnings are easily covering distributions, and the company is generating plenty of cash. 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. However, there are other things to consider for investors when analysing stock performance. As an example, we've identified 1 warning sign for United Security Bancshares that you should be aware of before investing. If you are a dividend investor, you might also want to look at our curated list of high yield 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.