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First US Bancshares, Inc. (NASDAQ:FUSB) has announced that it will pay a dividend of $0.05 per share on the 1st of July. Including this payment, the dividend yield on the stock will be 2.1%, which is a modest boost for shareholders' returns.
Check out our latest analysis for First US Bancshares
First US Bancshares' Dividend Forecasted To Be Well Covered By Earnings
While yield is important, another factor to consider about a company's dividend is whether the current payout levels are feasible.
First US Bancshares has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. Using data from its latest earnings report, First US Bancshares' payout ratio sits at 14%, an extremely comfortable number that shows that it can pay its dividend.
If the trend of the last few years continues, EPS will grow by 23.0% over the next 12 months. If the dividend continues on this path, the future payout ratio could be 12% by next year, which we think can be pretty sustainable going forward.
First US Bancshares 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. The annual payment during the last 10 years was $0.04 in 2014, and the most recent fiscal year payment was $0.20. This means that it has been growing its distributions at 17% per annum over that time. So, dividends have been growing pretty quickly, and even more impressively, they haven't experienced any notable falls during this period.
The Dividend Looks Likely To Grow
Investors could be attracted to the stock based on the quality of its payment history. We are encouraged to see that First US Bancshares has grown earnings per share at 23% per year over the past five years. A low payout ratio gives the company a lot of flexibility, and growing earnings also make it very easy for it to grow the dividend.
First US Bancshares Looks Like A Great Dividend Stock
In summary, it is good to see that the dividend is staying consistent, and we don't think there is any reason to suspect this might change over the medium term. 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.
It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For instance, we've picked out 1 warning sign for First US Bancshares that investors should take into consideration. 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.