Bank of the James Financial Group (NASDAQ:BOTJ) Has Announced A Dividend Of $0.08

The board of Bank of the James Financial Group, Inc. (NASDAQ:BOTJ) has announced that it will pay a dividend on the 8th of December, with investors receiving $0.08 per share. Including this payment, the dividend yield on the stock will be 3.2%, which is a modest boost for shareholders' returns.

View our latest analysis for Bank of the James Financial Group

Bank of the James Financial Group's Earnings Will Easily Cover The Distributions

While yield is important, another factor to consider about a company's dividend is whether the current payout levels are feasible.

Bank of the James Financial Group has established itself as a dividend paying company, given its 9-year history of distributing earnings to shareholders. While past data isn't a guarantee for the future, Bank of the James Financial Group's latest earnings report puts its payout ratio at 17%, showing that the company can pay out its dividends comfortably.

Looking forward, earnings per share could rise by 16.7% over the next year if the trend from the last few years continues. If the dividend continues on this path, the future payout ratio could be 16% by next year, which we think can be pretty sustainable going forward.

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

Even though the company has been paying a consistent dividend for a while, we would like to see a few more years before we feel comfortable relying on it. The annual payment during the last 9 years was $0.182 in 2014, and the most recent fiscal year payment was $0.32. This works out to be a compound annual growth rate (CAGR) of approximately 6.5% a year over that time. Bank of the James Financial Group has been growing its dividend at a decent rate, and the payments have been stable. However, the payment history is very short, so there is no evidence yet that the dividend can be sustained over a full economic cycle.

The Dividend Looks Likely To Grow

The company's investors will be pleased to have been receiving dividend income for some time. We are encouraged to see that Bank of the James Financial Group has grown earnings per share at 17% per year over the past five years. Bank of the James Financial Group definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

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

Overall, we think that this is a great income investment, and we think that maintaining the dividend this year may have been a conservative choice. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. Taking this all into consideration, this looks like it could be a good dividend opportunity.

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. For instance, we've picked out 2 warning signs for Bank of the James Financial Group that investors should take into consideration. 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.