Business First Bancshares (NASDAQ:BFST) Is Paying Out A Dividend Of $0.14

Business First Bancshares, Inc. (NASDAQ:BFST) has announced that it will pay a dividend of $0.14 per share on the 28th of February. The dividend yield is 2.0% based on this payment, which is a little bit low compared to the other companies in the industry.

View our latest analysis for Business First Bancshares

Business First Bancshares' Earnings Will Easily Cover The Distributions

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

Business First Bancshares has a good history of paying out dividends, with its current track record at 7 years. While past records don't necessarily translate into future results, the company's payout ratio of 25% also shows that Business First Bancshares is able to comfortably pay dividends.

The next 3 years are set to see EPS grow by 46.5%. The future payout ratio could be 21% over that time period, according to analyst estimates, which is a good look for the future of the dividend.

Business First Bancshares Is Still Building Its Track Record

The dividend's track record has been pretty solid, but with only 7 years of history we want to see a few more years of history before making any solid conclusions. The annual payment during the last 7 years was $0.32 in 2018, and the most recent fiscal year payment was $0.56. This means that it has been growing its distributions at 8.3% per annum over that time. The dividend has been growing as a reasonable rate, which we like. However, investors will probably want to see a longer track record before they consider Business First Bancshares to be a consistent dividend paying stock.

Business First Bancshares 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. However, Business First Bancshares has only grown its earnings per share at 2.5% per annum over the past five years. While growth may be thin on the ground, Business First Bancshares could always pay out a higher proportion of earnings to increase shareholder returns.

An additional note is that the company has been raising capital by issuing stock equal to 17% of shares outstanding in the last 12 months. Trying to grow the dividend when issuing new shares reminds us of the ancient Greek tale of Sisyphus - perpetually pushing a boulder uphill. Companies that consistently issue new shares are often suboptimal from a dividend perspective.

In Summary

Overall, a consistent dividend is a good thing, and we think that Business First Bancshares has the ability to continue this into the future. While the payout ratios are a good sign, we are less enthusiastic about the company's dividend record. The payment isn't stellar, but it could make a decent addition to a dividend portfolio.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. As an example, we've identified 2 warning signs for Business First Bancshares that you should be aware of before investing. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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