Bank of the James Financial Group's (NASDAQ:BOTJ) Dividend Will Be Increased To $0.08

Bank of the James Financial Group, Inc.'s (NASDAQ:BOTJ) dividend will be increasing from last year's payment of the same period to $0.08 on 9th of December. This takes the annual payment to 2.7% of the current stock price, which is about average for the industry.

Check out the opportunities and risks within the US Banks industry.

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.

Having paid out dividends for 8 years, Bank of the James Financial Group has a good history of paying out a part of its earnings to shareholders. While past records don't necessarily translate into future results, the company's payout ratio of 15% also shows that Bank of the James Financial Group is able to comfortably pay dividends.

Over the next year, EPS could expand by 26.4% if recent trends continue. If the dividend continues on this path, the future payout ratio could be 12% 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

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. Since 2014, the annual payment back then was $0.182, compared to the most recent full-year payment of $0.32. This implies that the company grew its distributions at a yearly rate of about 7.3% over that duration. 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. It's encouraging to see that Bank of the James Financial Group has been growing its earnings per share at 26% a year over the past five years. Earnings have been growing rapidly, and with a low payout ratio we think that the company could turn out to be a great dividend stock.

We Really Like Bank of the James Financial Group's Dividend

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. Earnings are easily covering distributions, and the company is generating plenty of cash. All in all, this checks a lot of the boxes we look for when choosing an income stock.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. As an example, we've identified 2 warning signs for Bank of the James Financial Group that you should be aware of before investing. 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.