Bank7 (NASDAQ:BSVN) Is Increasing Its Dividend To $0.21

Bank7 Corp.'s (NASDAQ:BSVN) dividend will be increasing from last year's payment of the same period to $0.21 on 10th of October. Based on this payment, the dividend yield for the company will be 3.3%, which is fairly typical for the industry.

See our latest analysis for Bank7

Bank7's Payment Expected To Have Solid Earnings Coverage

We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue.

Having paid out dividends for only 4 years, Bank7 does not have much of a history being a dividend paying company. 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.

Looking forward, earnings per share is forecast to fall by 3.8% over the next year. But if the dividend continues along recent trends, we estimate the future payout ratio could be 12%, 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 Doesn't Have A Long Payment History

Looking back, the dividend has been stable, but the company hasn't been paying a dividend for very long so we can't be confident that the dividend will remain stable through all economic environments. The dividend has gone from an annual total of $0.40 in 2019 to the most recent total annual payment of $0.84. This works out to be a compound annual growth rate (CAGR) of approximately 20% a year over that time. We're not overly excited about the relatively short history of dividend payments, however the dividend is growing at a nice rate and we might take a closer look.

The Dividend's Growth Prospects Are Limited

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Earnings have grown at around 4.1% a year for the past five years, which isn't massive but still better than seeing them shrink. While growth may be thin on the ground, Bank7 could always pay out a higher proportion of earnings to increase shareholder returns.

In Summary

Overall, it's great to see the dividend being raised and that it is still in a sustainable range. While the payout ratios are a good sign, we are less enthusiastic about the company's dividend record. 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.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For example, we've identified 3 warning signs for Bank7 (1 is significant!) 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.