Burke & Herbert Financial Services (NASDAQ:BHRB) Is Paying Out A Dividend Of $0.53

Burke & Herbert Financial Services Corp.'s (NASDAQ:BHRB) investors are due to receive a payment of $0.53 per share on 1st of December. This means the dividend yield will be fairly typical at 4.7%.

See our latest analysis for Burke & Herbert Financial Services

Burke & Herbert Financial Services' Earnings Will Easily Cover The Distributions

We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue.

Burke & Herbert Financial Services has a long history of paying out dividends, with its current track record at a minimum of 10 years. Past distributions do not necessarily guarantee future ones, but Burke & Herbert Financial Services' payout ratio of 76% is a good sign as this means that earnings decently cover dividends.

Looking forward, earnings per share could rise by 2.8% over the next year if the trend from the last few years continues. If the dividend continues along recent trends, we estimate the future payout ratio will be 51%, which would make us comfortable with the sustainability of the dividend, despite the levels currently being quite high.

Burke & Herbert Financial Services Has A Solid Track Record

The company has an extended history of paying stable dividends. The annual payment during the last 10 years was $1.90 in 2013, and the most recent fiscal year payment was $2.12. This implies that the company grew its distributions at a yearly rate of about 1.1% over that duration. While the consistency in the dividend payments is impressive, we think the relatively slow rate of growth is less attractive.

The Dividend's Growth Prospects Are Limited

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. However, Burke & Herbert Financial Services has only grown its earnings per share at 2.8% per annum over the past five years. Burke & Herbert Financial Services' earnings per share has barely grown, which is not ideal - perhaps this is why the company pays out the majority of its earnings to shareholders. That's fine as far as it goes, but we're less enthusiastic as this often signals that the dividend is likely to grow slower in the future.

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. Although they have been consistent in the past, we think the payments are a little high to be sustained. This company is not in the top tier of income providing stocks.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. You can also discover whether shareholders are aligned with insider interests by checking our visualisation of insider shareholdings and trades in Burke & Herbert Financial Services 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.