Burke & Herbert Financial Services' (NASDAQ:BHRB) Dividend Will Be $0.53

Burke & Herbert Financial Services Corp. (NASDAQ:BHRB) has announced that it will pay a dividend of $0.53 per share on the 3rd of June. This means the annual payment is 3.9% of the current stock price, which is above the average for the industry.

View our latest analysis for Burke & Herbert Financial Services

Burke & Herbert Financial Services' Dividend Forecasted To Be Well Covered By Earnings

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable.

Having distributed dividends for at least 10 years, Burke & Herbert Financial Services has a long history of paying out a part of its earnings to shareholders. Based on Burke & Herbert Financial Services' last earnings report, the payout ratio is at a decent 77%, meaning that the company is able to pay out its dividend with a bit of room to spare.

Looking forward, could fall by 9.7% if the company can't turn things around from the last few years. However, if the dividend continues along recent trends, we estimate the future payout ratio could reach 88%, meaning that most of the company's earnings is being paid out to shareholders.

Burke & Herbert Financial Services Has A Solid Track Record

The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. The dividend has gone from an annual total of $1.85 in 2014 to the most recent total annual payment of $2.12. This works out to be a compound annual growth rate (CAGR) of approximately 1.4% a year over that time. Slow and steady dividend growth might not sound that exciting, but dividends have been stable for ten years, which we think makes this a fairly attractive offer.

Dividend Growth May Be Hard To Come By

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. Burke & Herbert Financial Services has seen earnings per share falling at 9.7% per year over the last 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

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Burke & Herbert Financial Services' payments, as there could be some issues with sustaining them into the future. We can't deny that the payments have been very stable, but we are a little bit worried about the very high payout ratio. We don't think Burke & Herbert Financial Services is a great stock to add to your portfolio if income is your focus.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For example, we've picked out 1 warning sign for Burke & Herbert Financial Services that investors should know about before committing capital to this stock. If you are a dividend investor, you might also want to look at our curated list of high yield 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.