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BCB Bancorp, Inc. (NASDAQ:BCBP) has announced that it will pay a dividend of $0.16 per share on the 24th of February. The dividend yield will be 5.9% based on this payment which is still above the industry average.
See our latest analysis for BCB Bancorp
BCB Bancorp's Payment Expected To Have Solid Earnings Coverage
While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable.
BCB Bancorp has a long history of paying out dividends, with its current track record at a minimum of 10 years. Based on BCB Bancorp's last earnings report, the payout ratio is at a decent 65%, meaning that the company is able to pay out its dividend with a bit of room to spare.
The next 3 years are set to see EPS grow by 92.7%. The future payout ratio could be 40% over that time period, according to analyst estimates, which is a good look for the future of the dividend.
BCB Bancorp Has A Solid Track Record
Even over a long history of paying dividends, the company's distributions have been remarkably stable. Since 2015, the annual payment back then was $0.56, compared to the most recent full-year payment of $0.64. This implies that the company grew its distributions at a yearly rate of about 1.3% over that duration. While the consistency in the dividend payments is impressive, we think the relatively slow rate of growth is less attractive.
BCB Bancorp May Find It Hard To Grow The Dividend
The company's investors will be pleased to have been receiving dividend income for some time. However, initial appearances might be deceiving. BCB Bancorp has seen earnings per share falling at 3.9% per year over the last five years. A modest decline in earnings isn't great, and it makes it quite unlikely that the dividend will grow in the future unless that trend can be reversed. Earnings are forecast to grow over the next 12 months and if that happens we could still be a little bit cautious until it becomes a pattern.
In Summary
In summary, we are pleased with the dividend remaining consistent, and we think there is a good chance of this continuing in the future. While the payments look sustainable for now, earnings have been shrinking so the dividend could come under pressure in the future. This looks like it could be a good dividend stock going forward, but we would note that the payout ratio has been at higher levels in the past so it could happen again.
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. Taking the debate a bit further, we've identified 1 warning sign for BCB Bancorp that investors need to be conscious of moving forward. If you are a dividend investor, you might also want to look at our curated list of high yield 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.