Bank of the James Financial Group's (NASDAQ:BOTJ) Dividend Will Be $0.07

Bank of the James Financial Group, Inc.'s (NASDAQ:BOTJ) investors are due to receive a payment of $0.07 per share on 16th of September. This payment means the dividend yield will be 2.1%, which is below the average for the industry.

See 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 a good history of paying out dividends, with its current track record at 8 years. While past records don't necessarily translate into future results, the company's payout ratio of 16% also shows that Bank of the James Financial Group is able to comfortably pay dividends.

If the trend of the last few years continues, EPS will grow by 23.5% over the next 12 months. Assuming the dividend continues along recent trends, we think the future payout ratio could be 14% by next year, which is in a pretty sustainable range.

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 annual payment back then was $0.182, compared to the most recent full-year payment of $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

The company's investors will be pleased to have been receiving dividend income for some time. Bank of the James Financial Group has impressed us by growing EPS 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 think that this is a great income investment, and we think that maintaining the dividend this year may have been a conservative choice. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All in all, this checks a lot of the boxes we look for when choosing an income stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. However, there are other things to consider for investors when analysing stock performance. 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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