Bank7 (NASDAQ:BSVN) Will Pay A Larger Dividend Than Last Year At $0.21

The board of Bank7 Corp. (NASDAQ:BSVN) has announced that it will be paying its dividend of $0.21 on the 10th of October, an increased payment from last year's comparable dividend. Although the dividend is now higher, the yield is only 2.3%, which is below the industry average.

View our latest analysis for Bank7

Bank7's Earnings Will Easily Cover The Distributions

Even a low dividend yield can be attractive if it is sustained for years on end.

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.

Over the next year, EPS is forecast to fall by 3.8%. But if the dividend continues along the path it has been on recently, we estimate the future payout ratio could be 12%, which would be comfortable for the company to continue in the future.

Bank7 Doesn't Have A Long Payment History

The dividend hasn't seen any major cuts in the past, but the company has only been paying a dividend for 4 years, which isn't that long in the grand scheme of things. Since 2019, the dividend has gone from $0.40 total annually to $0.64. This means that it has been growing its distributions at 12% per annum 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.

The Dividend's Growth Prospects Are Limited

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. However, Bank7 has only grown its earnings per share at 4.1% per annum over the past five years. 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. 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.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. However, there are other things to consider for investors when analysing stock performance. To that end, Bank7 has 3 warning signs (and 1 which doesn't sit too well with us) we think you should know about. Is Bank7 not quite the opportunity you were looking for? Why not check out our selection of top 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.