Bank7's (NASDAQ:BSVN) Shareholders Will Receive A Bigger Dividend Than Last Year

The board of Bank7 Corp. (NASDAQ:BSVN) has announced that it will be increasing its dividend by 33% on the 5th of January to $0.16, up from last year's comparable payment of $0.12. This takes the annual payment to 1.8% of the current stock price, which unfortunately is below what the industry is paying.

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.

Bank7 is just starting to establish itself as being able to pay dividends to shareholders, given its short 3-year history of distributing earnings. Despite the company's shorter dividend history however, calculating for its payout ratio of 16% shows that Bank7 is able to comfortably pay dividends.

Looking forward, EPS is forecast to rise by 32.3% over the next 3 years. Analysts estimate the future payout ratio will be 15% over the same time period, which is in the range that makes us comfortable with the sustainability of the dividend.

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. Since 2019, the dividend has gone from $0.40 total annually to $0.48. This implies that the company grew its distributions at a yearly rate of about 6.3% over that duration. Bank7 has a nice track record of dividend growth but we would wait until we see a longer track record before getting too confident.

Dividend Growth May Be Hard To Achieve

The company's investors will be pleased to have been receiving dividend income for some time. Let's not jump to conclusions as things might not be as good as they appear on the surface. Unfortunately, Bank7's earnings per share has been essentially flat over the past five years, which means the dividend may not be increased each year.

Our Thoughts On Bank7's Dividend

Overall, this is probably not a great income stock, even though the dividend is being raised at the moment. The company hasn't been paying a very consistent dividend over time, despite only paying out a small portion of earnings. We don't think Bank7 is a great stock to add to your portfolio if income is your focus.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. However, there are other things to consider for investors when analysing stock performance. For instance, we've picked out 2 warning signs for Bank7 that investors should take into consideration. 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.