Bank7 (NASDAQ:BSVN) Has Announced That It Will Be Increasing Its Dividend To $0.16

Bank7 Corp.'s (NASDAQ:BSVN) dividend will be increasing from last year's payment of the same period to $0.16 on 7th of July. Despite this raise, the dividend yield of 2.6% is only a modest boost to shareholder returns.

See our latest analysis for Bank7

Bank7'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.

Bank7 is just starting to establish itself as being able to pay dividends to shareholders, given its short 4-year history of distributing earnings. Based on its last earnings report however, the payout ratio is at a comfortable 15%, meaning that Bank7 may be able to sustain this dividend for future years if it continues on this earnings trend.

Over the next year, EPS is forecast to fall by 1.6%. But if the dividend continues along recent trends, we estimate the future payout ratio could be 11%, which we would consider to be quite comfortable looking forward, with most of the company's earnings left over to grow the business in the future.

Bank7 Is Still Building Its Track Record

The dividend has been pretty stable looking back, but the company hasn't been paying one for very long. This makes it tough to judge how it would fare through a full economic cycle. Since 2019, the dividend has gone from $0.40 total annually to $0.64. This works out to be a compound annual growth rate (CAGR) of approximately 12% a year over that time. The dividend has been growing rapidly, however with such a short payment history we can't know for sure if payment can continue to grow over the long term, so caution may be warranted.

Dividend Growth May Be Hard To Achieve

The company's investors will be pleased to have been receiving dividend income for some time. Earnings has been rising at 2.2% per annum over the last five years, which admittedly is a bit slow. While growth may be thin on the ground, Bank7 could always pay out a higher proportion of earnings to increase shareholder returns.

Our Thoughts On Bank7's Dividend

In summary, it's great to see that the company can raise the dividend and keep it in a sustainable range. The dividend has been at reasonable levels historically, but that hasn't translated into a consistent payment. This looks like it could be a good dividend stock going forward, but we would note that the payout ratio has been at higher levels in the past so it could happen again.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Case in point: We've spotted 3 warning signs for Bank7 (of which 1 can't be ignored!) you should know about. 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.