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The board of MVB Financial Corp. (NASDAQ:MVBF) has announced that it will pay a dividend on the 15th of December, with investors receiving $0.17 per share. This means the dividend yield will be fairly typical at 3.1%.
See our latest analysis for MVB Financial
MVB Financial's Payment Expected To Have Solid Earnings Coverage
Solid dividend yields are great, but they only really help us if the payment is sustainable.
MVB Financial has a long history of paying out dividends, with its current track record at a minimum of 10 years. Past distributions do not necessarily guarantee future ones, but MVB Financial's payout ratio of 47% is a good sign as this means that earnings decently cover dividends.
Over the next 3 years, EPS is forecast to expand by 127.1%. The future payout ratio could be 30% over that time period, according to analyst estimates, which is a good look for the future of the dividend.
MVB Financial Has A Solid Track Record
The company has an extended history of paying stable dividends. The dividend has gone from an annual total of $0.08 in 2014 to the most recent total annual payment of $0.68. This implies that the company grew its distributions at a yearly rate of about 24% over that duration. We can see that payments have shown some very nice upward momentum without faltering, which provides some reassurance that future payments will also be reliable.
Dividend Growth May Be Hard To Come By
Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. However, initial appearances might be deceiving. In the last five years, MVB Financial's earnings per share has shrunk at approximately 7.7% per annum. If the company is making less over time, it naturally follows that it will also have to pay out less in dividends. 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
Overall, a consistent dividend is a good thing, and we think that MVB Financial has the ability to continue this into the future. While the payments look sustainable for now, earnings have been shrinking so the dividend could come under pressure in the future. The payment isn't stellar, but it could make a decent addition to a dividend portfolio.
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. Without at least some growth in earnings per share over time, the dividend will eventually come under pressure either from competition or inflation. Very few businesses see earnings consistently shrink year after year in perpetuity though, and so it might be worth seeing what the 3 analysts we track are forecasting for the future. 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.