Bank of Marin Bancorp's (NASDAQ:BMRC) Upcoming Dividend Will Be Larger Than Last Year's

Bank of Marin Bancorp (NASDAQ:BMRC) has announced that it will be increasing its dividend on the 6th of August to US$0.24. This takes the annual payment to 2.8% of the current stock price, which is about average for the industry.

See our latest analysis for Bank of Marin Bancorp

Bank of Marin Bancorp's Earnings Easily Cover the Distributions

We aren't too impressed by dividend yields unless they can be sustained over time. However, Bank of Marin Bancorp's earnings easily cover the dividend. As a result, a large proportion of what it earned was being reinvested back into the business.

Looking forward, earnings per share is forecast to fall by 19.1% over the next year. Assuming the dividend continues along recent trends, we believe the payout ratio could be 52%, which we are pretty comfortable with and we think is feasible on an earnings basis.

Bank of Marin Bancorp Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. The first annual payment during the last 10 years was US$0.32 in 2011, and the most recent fiscal year payment was US$0.96. This means that it has been growing its distributions at 12% per annum over that time. So, dividends have been growing pretty quickly, and even more impressively, they haven't experienced any notable falls during this period.

Bank of Marin Bancorp Could Grow Its Dividend

Investors could be attracted to the stock based on the quality of its payment history. Bank of Marin Bancorp has impressed us by growing EPS at 8.6% per year over the past five years. Growth in EPS bodes well for the dividend, as does the low payout ratio that the company is currently reporting.

Bank of Marin Bancorp Looks Like A Great Dividend Stock

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. The distributions are easily covered by earnings, and there is plenty of cash being generated as well. However, it is worth noting that the earnings are expected to fall over the next year, which may not change the long term outlook, but could affect the dividend payment in the next 12 months. All in all, this checks a lot of the boxes we look for when choosing an income stock.

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. Earnings growth generally bodes well for the future value of company dividend payments. See if the 4 Bank of Marin Bancorp analysts we track are forecasting continued growth with our free report on analyst estimates for the company. We have also put together a list of global stocks with a solid dividend.

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