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The board of John Marshall Bancorp, Inc. (NASDAQ:JMSB) has announced that it will be paying its dividend of $0.30 on the 7th of July, an increased payment from last year's comparable dividend. This takes the annual payment to 1.9% of the current stock price, which unfortunately is below what the industry is paying.
John Marshall Bancorp's Earnings Will Easily Cover The Distributions
If it is predictable over a long period, even low dividend yields can be attractive.
John Marshall Bancorp has a short history of paying out dividends, with its current track record at only 2 years. Based on its last earnings report however, the payout ratio is at a comfortable 20%, meaning that John Marshall Bancorp may be able to sustain this dividend for future years if it continues on this earnings trend.
EPS is set to fall by 0.6% over the next 12 months if recent trends continue. If the dividend continues along recent trends, we estimate the future payout ratio could be 24%, which we consider to be quite comfortable, with most of the company's earnings left over to grow the business in the future.
Check out our latest analysis for John Marshall Bancorp
John Marshall Bancorp Is Still Building Its Track Record
The dividend hasn't seen any major cuts in the past, but the company has only been paying a dividend for 2 years, which isn't that long in the grand scheme of things. Since 2023, the dividend has gone from $0.22 total annually to $0.30. This implies that the company grew its distributions at a yearly rate of about 17% over that duration. 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.
John Marshall Bancorp May Find It Hard To Grow The Dividend
Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Let's not jump to conclusions as things might not be as good as they appear on the surface. However, John Marshall Bancorp's EPS was effectively flat over the past five years, which could stop the company from paying more every year.
In Summary
Overall, this is probably not a great income stock, even though the dividend is being raised at the moment. The low payout ratio is a redeeming feature, but generally we are not too happy with the payments John Marshall Bancorp has been making. This company is not in the top tier of income providing stocks.