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Richmond Mutual Bancorporation, Inc.'s (NASDAQ:RMBI) investors are due to receive a payment of $0.14 per share on 13th of June. This makes the dividend yield 4.7%, which will augment investor returns quite nicely.
See our latest analysis for Richmond Mutual Bancorporation
Richmond Mutual Bancorporation's Dividend Forecasted To Be Well Covered By Earnings
We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable.
Richmond Mutual Bancorporation has a short history of paying out dividends, with its current track record at only 4 years. Based on Richmond Mutual Bancorporation's last earnings report, calculating for its payout ratio equates to 64%, which means that the company covered its last dividend with comfortable room to spare.
Over the next year, EPS could expand by 1.8% if the company continues along the path it has been on recently. If recent patterns in the dividend continue, the payout ratio in 12 months could be 87% which is a bit high but can definitely be sustainable.
Richmond Mutual Bancorporation Doesn't Have A Long Payment History
The dividend has been pretty stable looking back, but the company hasn't been paying one for very long. This makes it tough to judge how it would fare through a full economic cycle. Since 2020, the annual payment back then was $0.20, compared to the most recent full-year payment of $0.56. This works out to be a compound annual growth rate (CAGR) of approximately 29% a year over that time. It is always nice to see strong dividend growth, but with such a short payment history we wouldn't be inclined to rely on it until a longer track record can be developed.
Dividend Growth May Be Hard To Achieve
Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. However, Richmond Mutual Bancorporation's EPS was effectively flat over the past three years, which could stop the company from paying more every year. Growth of 1.8% per annum is not particularly high, which might explain why the company is paying out a higher proportion of earnings. While this isn't necessarily a negative, it definitely signals that dividend growth could be constrained in the future unless earnings start to pick up again.
Our Thoughts On Richmond Mutual Bancorporation's Dividend
In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Richmond Mutual Bancorporation's payments, as there could be some issues with sustaining them into the future. The company hasn't been paying a very consistent dividend over time, despite only paying out a small portion of earnings. We would be a touch cautious of relying on this stock primarily for the dividend income.