Bank of the James Financial Group (NASDAQ:BOTJ) Has Announced A Dividend Of US$0.07

The board of Bank of the James Financial Group, Inc. (NASDAQ:BOTJ) has announced that it will pay a dividend of US$0.07 per share on the 18th of March. This means the annual payment will be 1.8% of the current stock price, which is lower than the industry average.

Check out our latest analysis for Bank of the James Financial Group

Bank of the James Financial Group's Payment Has Solid Earnings Coverage

The dividend yield is a little bit low, but sustainability of the payments is also an important part of evaluating an income stock. Before making this announcement, Bank of the James Financial Group was easily earning enough to cover the dividend. This means that most of its earnings are being retained to grow the business.

Over the next year, EPS could expand by 13.7% if recent trends continue. Assuming the dividend continues along recent trends, we think the payout ratio could be 16% by next year, which is in a pretty sustainable range.

Bank of the James Financial Group Doesn't Have A Long Payment History

Bank of the James Financial Group's dividend has been pretty stable for a little while now, but we will continue to be cautious until it has been demonstrated for a few more years. The first annual payment during the last 8 years was US$0.18 in 2014, and the most recent fiscal year payment was US$0.28. This works out to be a compound annual growth rate (CAGR) of approximately 5.5% a year over that time. Investors will likely want to see a longer track record of growth before making decision to add this to their income portfolio.

The Dividend Looks Likely To Grow

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. We are encouraged to see that Bank of the James Financial Group has grown earnings per share at 14% per year over the past five years. A low payout ratio and decent growth suggests that the company is reinvesting well, and it also has plenty of room to increase the dividend over time.

Bank of the James Financial Group Looks Like A Great Dividend Stock

Overall, we like to see the dividend staying consistent, and we think Bank of the James Financial Group might even raise payments in the future. Earnings are easily covering distributions, and the company is generating plenty of cash. 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. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Taking the debate a bit further, we've identified 2 warning signs for Bank of the James Financial Group that investors need to be conscious of moving forward. Looking for more high-yielding dividend ideas? Try our curated list of strong dividend payers.

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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.