BayFirst Financial's (NASDAQ:BAFN) Dividend Will Be $0.08

BayFirst Financial Corp.'s (NASDAQ:BAFN) investors are due to receive a payment of $0.08 per share on 15th of September. This means the annual payment will be 2.4% of the current stock price, which is lower than the industry average.

Check out our latest analysis for BayFirst Financial

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

It would be nice for the yield to be higher, but we should also check if higher levels of dividend payment would be sustainable.

BayFirst Financial has a short history of paying out dividends, with its current track record at only 4 years. Based on BayFirst Financial's last earnings report, calculating for its payout ratio equates to 32%, which means that the company covered its last dividend with comfortable room to spare.

EPS is set to fall by 4.9% over the next 12 months if recent trends continue. Assuming the dividend continues along recent trends, we believe the future payout ratio could be 38%, which we are pretty comfortable with and we think is feasible on an earnings basis.

BayFirst Financial Is Still Building Its Track Record

The company has maintained a consistent dividend for a few years now, but we would like to see a longer track record before relying on it. The annual payment during the last 4 years was $0.179 in 2020, and the most recent fiscal year payment was $0.32. This implies that the company grew its distributions at a yearly rate of about 16% over that duration. We're not overly excited about the relatively short history of dividend payments, however the dividend is growing at a nice rate and we might take a closer look.

BayFirst Financial May Find It Hard To Grow The Dividend

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Let's not jump to conclusions as things might not be as good as they appear on the surface. It's not great to see that BayFirst Financial's earnings per share has fallen at approximately 4.9% per year over the past five years. A modest decline in earnings isn't great, and it makes it quite unlikely that the dividend will grow in the future unless that trend can be reversed.

In Summary

Overall, it's nice to see a consistent dividend payment, but we think that longer term, the current level of payment might be unsustainable. The company hasn't been paying a very consistent dividend over time, despite only paying out a small portion of earnings. Overall, we don't think this company has the makings of a good income stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Case in point: We've spotted 4 warning signs for BayFirst Financial (of which 1 is potentially serious!) you should know about. Is BayFirst Financial not quite the opportunity you were looking for? Why not check out our selection of top 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.