BayFirst Financial (NASDAQ:BAFN) Is Paying Out A Dividend Of $0.08

BayFirst Financial Corp. (NASDAQ:BAFN) will pay a dividend of $0.08 on the 15th of March. Including this payment, the dividend yield on the stock will be 2.0%, which is a modest boost for shareholders' returns.

See our latest analysis for BayFirst Financial

BayFirst Financial's Dividend Forecasted To Be Well Covered By Earnings

While yield is important, another factor to consider about a company's dividend is whether the current payout levels are feasible.

Having paid out dividends for only 4 years, BayFirst Financial does not have much of a history being a dividend paying company. Based on BayFirst Financial's last earnings report, calculating for its payout ratio equates to 43%, which means that the company covered its last dividend with comfortable room to spare.

Over the next year, EPS could expand by 16.3% if recent trends continue. If the dividend continues along recent trends, we estimate the future payout ratio will be 11%, which is in the range that makes us comfortable with the sustainability of the dividend.

BayFirst Financial Is Still Building Its Track Record

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. The annual payment during the last 4 years was $0.179 in 2021, and the most recent fiscal year payment was $0.32. This means that it has been growing its distributions at 16% per annum over that time. BayFirst Financial has been growing its dividend quite rapidly, which is exciting. However, the short payment history makes us question whether this performance will persist across a full market cycle.

The Dividend Looks Likely To Grow

The company's investors will be pleased to have been receiving dividend income for some time. It's encouraging to see that BayFirst Financial has been growing its earnings per share at 16% a year over the past five years. Since earnings per share is growing at an acceptable rate, and the payout policy is balanced, we think the company is positioning itself well to grow earnings and dividends in the future.

We Really Like BayFirst Financial's Dividend

In summary, it is good to see that the dividend is staying consistent, and we don't think there is any reason to suspect this might change over the medium term. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. All in all, this checks a lot of the boxes we look for when choosing an income stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. However, there are other things to consider for investors when analysing stock performance. Case in point: We've spotted 2 warning signs for BayFirst Financial (of which 1 doesn't sit too well with us!) you should know about. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.