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Richmond Mutual Bancorporation, Inc. (NASDAQ:RMBI) has announced that it will pay a dividend of $0.14 per share on the 18th of September. This makes the dividend yield 4.5%, which will augment investor returns quite nicely.
See our latest analysis for Richmond Mutual Bancorporation
Richmond Mutual Bancorporation's Payment Expected To Have Solid Earnings Coverage
If the payments aren't sustainable, a high yield for a few years won't matter that much.
Having paid out dividends for only 4 years, Richmond Mutual Bancorporation does not have much of a history being a dividend paying company. Based on Richmond Mutual Bancorporation's last earnings report, calculating for its payout ratio equates to 69%, which means that the company covered its last dividend with comfortable room to spare.
Looking forward, could fall by 1.6% if the company can't turn things around from the last few years. However, if the dividend continues along recent trends, we estimate the future payout ratio could reach 93%, meaning that most of the company's earnings is being paid out to shareholders.
Richmond Mutual Bancorporation Doesn't Have A Long Payment History
Looking back, the dividend has been stable, but the company hasn't been paying a dividend for very long so we can't be confident that the dividend will remain stable through all economic environments. Since 2020, the dividend has gone from $0.20 total annually to $0.56. This means that it has been growing its distributions at 29% per annum 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, things aren't all that rosy. However, Richmond Mutual Bancorporation's EPS was effectively flat over the past three years, which could stop the company from paying more every year.
Our Thoughts On Richmond Mutual Bancorporation's Dividend
Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. While Richmond Mutual Bancorporation is earning enough to cover the dividend, we are generally unimpressed with its future prospects. We would be a touch cautious of relying on this stock primarily for the dividend income.
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. For example, we've picked out 1 warning sign for Richmond Mutual Bancorporation that investors should know about before committing capital to this stock. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.
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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.