Bank of the James Financial Group (NASDAQ:BOTJ) Is Due To Pay 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 16th of June, with investors receiving $0.08 per share. This payment means that the dividend yield will be 3.3%, which is around the industry average.

View our latest analysis for Bank of the James Financial Group

Bank of the James Financial Group's Dividend Forecasted To Be Well Covered By Earnings

While it is always good to see a solid dividend yield, we should also consider whether the payment is feasible.

Bank of the James Financial Group has a good history of paying out dividends, with its current track record at 9 years. 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 16%, showing that the company can pay out its dividends comfortably.

Looking forward, earnings per share could rise by 23.1% 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 14% 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

It is great to see that Bank of the James Financial Group has been paying a stable dividend for a number of years now, however we want to be a bit cautious about whether this will remain true through a full economic cycle. Since 2014, the dividend has gone from $0.182 total annually to $0.32. This means that it has been growing its distributions at 6.5% per annum over that time. Bank of the James Financial Group has a nice track record of dividend growth but we would wait until we see a longer track record before getting too confident.

The Dividend Looks Likely To Grow

Investors could be attracted to the stock based on the quality of its payment history. We are encouraged to see that Bank of the James Financial Group has grown earnings per share at 23% per year over the past five years. Earnings per share is growing at a solid clip, and the payout ratio is low which we think is an ideal combination in a dividend stock as the company can quite easily raise the dividend in the future.

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. 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. All of these factors considered, we think this has solid potential as a dividend stock.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. As an example, we've identified 2 warning signs for Bank of the James Financial Group that you should be aware of before investing. 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.