Bank of the James Financial Group (NASDAQ:BOTJ) Is Due To Pay A Dividend Of $0.08

Bank of the James Financial Group, Inc. (NASDAQ:BOTJ) has announced that it will pay a dividend of $0.08 per share on the 8th of December. This payment means that the dividend yield will be 3.2%, which is around the industry average.

See 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

We aren't too impressed by dividend yields unless they can be sustained over time.

Having paid out dividends for 9 years, Bank of the James Financial Group has a good history of paying out a part of its earnings to shareholders. Using data from its latest earnings report, Bank of the James Financial Group's payout ratio sits at 17%, an extremely comfortable number that shows that it can pay its dividend.

Looking forward, earnings per share could rise by 16.7% over the next year if the trend from the last few years continues. Assuming the dividend continues along recent trends, we think the future payout ratio could be 16% by next year, which is in a pretty sustainable range.

Bank of the James Financial Group Is Still Building Its Track Record

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. Since 2014, the annual payment back then was $0.182, compared to the most recent full-year payment of $0.32. This works out to be a compound annual growth rate (CAGR) of approximately 6.5% 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

The company's investors will be pleased to have been receiving dividend income for some time. Bank of the James Financial Group has seen EPS rising for the last five years, at 17% per annum. Growth in EPS bodes well for the dividend, as does the low payout ratio that the company is currently reporting.

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. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For example, we've picked out 2 warning signs for Bank of the James Financial Group that investors should know about before committing capital to this stock. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.