Business First Bancshares (NASDAQ:BFST) Has Affirmed Its Dividend Of $0.12

Business First Bancshares, Inc. (NASDAQ:BFST) has announced that it will pay a dividend of $0.12 per share on the 31st of August. The dividend yield is 2.0% based on this payment, which is a little bit low compared to the other companies in the industry.

Check out our latest analysis for Business First Bancshares

Business First Bancshares' Earnings Will Easily Cover The Distributions

Even a low dividend yield can be attractive if it is sustained for years on end.

Having paid out dividends for only 4 years, Business First Bancshares does not have much of a history being a dividend paying company. While it has a shorter history of paying out dividends, Business First Bancshares' payout ratio of 23% is a great sign for current shareholders, as this means that earnings greatly cover dividends.

Looking forward, EPS is forecast to rise by 50.0% over the next 3 years. Analysts estimate the future payout ratio will be 20% over the same time period, which is in the range that makes us comfortable with the sustainability of the dividend.

Business First Bancshares 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. The annual payment during the last 4 years was $0.32 in 2018, and the most recent fiscal year payment was $0.48. This works out to be a compound annual growth rate (CAGR) of approximately 11% a year over that time. The dividend has been growing rapidly, however with such a short payment history we can't know for sure if payment can continue to grow over the long term, so caution may be warranted.

The Dividend Looks Likely To Grow

Investors could be attracted to the stock based on the quality of its payment history. Business First Bancshares has seen EPS rising for the last five years, at 18% per annum. Growth in EPS bodes well for the dividend, as does the low payout ratio that the company is currently reporting.

We Really Like Business First Bancshares' 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. Taking this all into consideration, this looks like it could be a good dividend opportunity.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. However, there are other things to consider for investors when analysing stock performance. For example, we've picked out 1 warning sign for Business First Bancshares that investors should know about before committing capital to this stock. Is Business First Bancshares not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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