Bank7 Corp.'s (NASDAQ:BSVN) periodic dividend will be increasing on the 5th of January to $0.16, with investors receiving 33% more than last year's $0.12. Even though the dividend went up, the yield is still quite low at only 1.8%.
Bank7's Dividend Forecasted To Be Well Covered By Earnings
Even a low dividend yield can be attractive if it is sustained for years on end.
Having paid out dividends for only 3 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 16%, meaning that Bank7 may be able to sustain this dividend for future years if it continues on this earnings trend.
Looking forward, EPS is forecast to rise by 32.3% over the next 3 years. The future payout ratio could be 15% over that time period, according to analyst estimates, which is a good look for the future of the dividend.
Bank7 Is Still Building Its Track Record
The dividend hasn't seen any major cuts in the past, but the company has only been paying a dividend for 3 years, which isn't that long in the grand scheme of things. Since 2019, the dividend has gone from $0.40 total annually to $0.48. This works out to be a compound annual growth rate (CAGR) of approximately 6.3% a year over that time. Bank7 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.
Bank7 May Find It Hard To Grow The Dividend
Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. However, things aren't all that rosy. Although it's important to note that Bank7's earnings per share has basically not grown from where it was five years ago, which could erode the purchasing power of the dividend over time.
Overall, we always like to see the dividend being raised, but we don't think Bank7 will make a great income stock. While Bank7 is earning enough to cover the dividend, we are generally unimpressed with its future prospects. We would be a touch cautious of relying on this stock primarily for the dividend income.
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. Taking the debate a bit further, we've identified 2 warning signs for Bank7 that investors need to be conscious of moving forward. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.
What are the risks and opportunities for Bank7?
Trading at 57.3% below our estimate of its fair value
Earnings are forecast to grow 8.87% per year
Earnings grew by 28% over the past year
No risks detected for BSVN from our risks checks.
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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.