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The board of BCB Bancorp, Inc. (NASDAQ:BCBP) has announced that it will pay a dividend of $0.16 per share on the 21st of May. This means the annual payment is 7.3% of the current stock price, which is above the average for the industry.
BCB Bancorp Not Expected To Earn Enough To Cover Its Payments
A big dividend yield for a few years doesn't mean much if it can't be sustained.
BCB Bancorp has a long history of paying out dividends, with its current track record at a minimum of 10 years. Past distributions unfortunately do not guarantee future ones, and BCB Bancorp's last earnings report actually showed that the company went over its net earnings in its total dividend distribution. This is an alarming sign that could mean that BCB Bancorp's dividend at its current rate may no longer be sustainable for longer.
Earnings per share is forecast to rise by 129.1% over the next year. If the dividend continues on its recent course, the future payout ratio in 12 months could be 191%, which is a bit high and could start applying pressure to the balance sheet.
View our latest analysis for BCB Bancorp
BCB Bancorp Has A Solid Track Record
The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. Since 2015, the annual payment back then was $0.56, compared to the most recent full-year payment of $0.64. This works out to be a compound annual growth rate (CAGR) of approximately 1.3% a year over that time. Although we can't deny that the dividend has been remarkably stable in the past, the growth has been pretty muted.
The Dividend Has Limited Growth Potential
Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. However, things aren't all that rosy. Earnings per share has been sinking by 32% over the last five years. Dividend payments are likely to come under some pressure unless EPS can pull out of the nosedive it is in. It's not all bad news though, as the earnings are predicted to rise over the next 12 months - we would just be a bit cautious until this becomes a long term trend.
The Dividend Could Prove To Be Unreliable
Overall, it's nice to see a consistent dividend payment, but we think that longer term, the current level of payment might be unsustainable. We can't deny that the payments have been very stable, but we are a little bit worried about the very high payout ratio. This company is not in the top tier of income providing stocks.