Bank of Marin Bancorp (NASDAQ:BMRC) Has Announced A Dividend Of $0.25

Bank of Marin Bancorp (NASDAQ:BMRC) has announced that it will pay a dividend of $0.25 per share on the 15th of February. This means the annual payment is 5.1% of the current stock price, which is above the average for the industry.

Check out our latest analysis for Bank of Marin Bancorp

Bank of Marin Bancorp's Dividend Forecasted To Be Well Covered By Earnings

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained.

Bank of Marin Bancorp has a long history of paying out dividends, with its current track record at a minimum of 10 years. Based on Bank of Marin Bancorp's last earnings report, the payout ratio is at a decent 80%, meaning that the company is able to pay out its dividend with a bit of room to spare.

The next 3 years are set to see EPS grow by 49.5%. Despite the current payout ratio being slightly elevated, analysts estimate the future payout ratio will be 62% over the same time period, which would make us comfortable with the sustainability of the dividend.

Bank of Marin Bancorp 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 annual payment during the last 10 years was $0.36 in 2014, and the most recent fiscal year payment was $1.00. This means that it has been growing its distributions at 11% per annum over that time. It is good to see that there has been strong dividend growth, and that there haven't been any cuts for a long time.

The Dividend Has Limited Growth Potential

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. However, things aren't all that rosy. Over the past five years, it looks as though Bank of Marin Bancorp's EPS has declined at around 12% a year. This steep decline can indicate that the business is going through a tough time, which could constrain its ability to pay a larger dividend each year in the future. On the bright side, earnings are predicted to gain some ground over the next year, but until this turns into a pattern we wouldn't be feeling too comfortable.

In Summary

Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. In the past the payments have been stable, but we think the company is paying out too much for this to continue for the long term. We would probably look elsewhere for an income investment.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. However, there are other things to consider for investors when analysing stock performance. Taking the debate a bit further, we've identified 2 warning signs for Bank of Marin Bancorp that investors need to be conscious of moving forward. Is Bank of Marin Bancorp not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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