Bank of the James Financial Group (NASDAQ:BOTJ) Will Pay 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 on the 18th of March, with investors receiving US$0.07 per share. This means that the annual payment will be 1.8% of the current stock price, which is in line with the average for the industry.

See our latest analysis for Bank of the James Financial Group

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

Solid dividend yields are great, but they only really help us if the payment is sustainable. However, Bank of the James Financial Group's earnings easily 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

The dividend's track record has been pretty solid, but with only 8 years of history we want to see a few more years of history before making any solid conclusions. The dividend has gone from US$0.18 in 2014 to the most recent annual payment of US$0.28. This works out to be a compound annual growth rate (CAGR) of approximately 5.5% 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

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Bank of the James Financial Group has impressed us by growing EPS at 14% 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

In summary, it is good to see that the dividend is staying consistent, and we don't think there is any reason to suspect this might change over the medium term. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All of these factors considered, we think this has solid potential as a dividend stock.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. 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 collection 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.