The board of Bank of the James Financial Group, Inc. (NASDAQ:BOTJ) has announced that it will pay a dividend of $0.10 per share on the 20th of June. This means the dividend yield will be fairly typical at 2.9%.
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Solid dividend yields are great, but they only really help us if the payment is sustainable.
Having distributed dividends for at least 10 years, Bank of the James Financial Group has a long history of paying out a part of its earnings to shareholders. Using data from its latest earnings report, Bank of the James Financial Group's payout ratio sits at 21%, an extremely comfortable number that shows that it can pay its dividend.
Over the next year, EPS could expand by 5.4% if recent trends continue. If the dividend continues on this path, the future payout ratio could be 28% by next year, which we think can be pretty sustainable going forward.
See our latest analysis for Bank of the James Financial Group
The company has a sustained record of paying dividends with very little fluctuation. Since 2015, the dividend has gone from $0.182 total annually to $0.40. This means that it has been growing its distributions at 8.2% per annum over that time. Companies like this can be very valuable over the long term, if the decent rate of growth can be maintained.
Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. We are encouraged to see that Bank of the James Financial Group has grown earnings per share at 5.4% per year over the past five years. Bank of the James Financial Group definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.
Overall, we think that this is a great income investment, and we think that maintaining the dividend this year may have been a conservative choice. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All of these factors considered, we think this has solid potential as a dividend stock.
It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. As an example, we've identified 1 warning sign for Bank of the James Financial Group that you should be aware of before investing. Is Bank of the James Financial Group not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.
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