CB Financial Services (NASDAQ:CBFV) Will Pay A Larger Dividend Than Last Year At $0.25

The board of CB Financial Services, Inc. (NASDAQ:CBFV) has announced that the dividend on 28th of February will be increased to $0.25, which will be 4.2% higher than last year's payment of $0.24 which covered the same period. This takes the dividend yield to 4.4%, which shareholders will be pleased with.

See our latest analysis for CB Financial Services

CB Financial Services' Payment Expected To Have Solid Earnings Coverage

If the payments aren't sustainable, a high yield for a few years won't matter that much.

Having paid out dividends for 9 years, CB Financial Services has a good history of paying out a part of its earnings to shareholders. Taking data from its last earnings report, calculating for the company's payout ratio of 44%shows that CB Financial Services would be able to pay its last dividend without pressure on the balance sheet.

Over the next 3 years, EPS is forecast to expand by 45.3%. The future payout ratio could be 36% over that time period, according to analyst estimates, which is a good look for the future of the dividend.

CB Financial Services Is Still Building Its Track Record

CB Financial Services' dividend has been pretty stable for a little while now, but we will continue to be cautious until it has been demonstrated for a few more years. The annual payment during the last 9 years was $0.84 in 2014, and the most recent fiscal year payment was $0.96. This works out to be a compound annual growth rate (CAGR) of approximately 1.5% a year over that time. Modest dividend growth is good to see, especially with the payments being relatively stable. However, the payment history is relatively short and we wouldn't want to rely on this dividend too much.

The Dividend Has Growth Potential

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. CB Financial Services has seen EPS rising for the last five years, at 5.4% per annum. The company is paying a reasonable amount of earnings to shareholders, and is growing earnings at a decent rate so we think it could be a decent dividend stock.

Our Thoughts On CB Financial Services' Dividend

Overall, this is a reasonable dividend, and it being raised is an added bonus. 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. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Taking the debate a bit further, we've identified 1 warning sign for CB Financial Services that investors need to be conscious of moving forward. 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.