Capital Bancorp (NASDAQ:CBNK) Has Announced A Dividend Of $0.06

Capital Bancorp, Inc. (NASDAQ:CBNK) has announced that it will pay a dividend of $0.06 per share on the 31st of May. This payment means the dividend yield will be 1.5%, which is below the average for the industry.

See our latest analysis for Capital Bancorp

Capital Bancorp's Dividend Forecasted To Be Well Covered By Earnings

The dividend yield is a little bit low, but sustainability of the payments is also an important part of evaluating an income stock.

Capital Bancorp has a short history of paying out dividends, with its current track record at only 2 years. Despite the company's shorter dividend history however, calculating for its payout ratio of 6.1% shows that Capital Bancorp is able to comfortably pay dividends.

Over the next year, EPS is forecast to fall by 6.1%. But if the dividend continues along the path it has been on recently, we estimate the future payout ratio could be 8.8%, which would be comfortable for the company to continue in the future.

Capital Bancorp Is Still Building Its Track Record

The company has maintained a consistent dividend for a few years now, but we would like to see a longer track record before relying on it. The dividend has gone from an annual total of $0.20 in 2021 to the most recent total annual payment of $0.24. This means that it has been growing its distributions at 9.5% per annum over that time. Capital Bancorp has a nice track record of dividend growth but we would wait until we see a longer track record before getting too confident.

The Dividend Looks Likely To Grow

The company's investors will be pleased to have been receiving dividend income for some time. It's encouraging to see that Capital Bancorp has been growing its earnings per share at 34% a year over the past five years. A low payout ratio gives the company a lot of flexibility, and growing earnings also make it very easy for it to grow the dividend.

Capital Bancorp Looks Like A Great Dividend Stock

Overall, we think that this is a great income investment, and we think that maintaining the dividend this year may have been a conservative choice. The company is generating plenty of cash, and the earnings also quite easily cover the distributions. We should point out that the earnings are expected to fall over the next 12 months, which won't be a problem if this doesn't become a trend, but could cause some turbulence in the next year. All of these factors considered, we think this has solid potential as a dividend stock.

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. As an example, we've identified 1 warning sign for Capital Bancorp 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.