Capital Bancorp, Inc. (NASDAQ:CBNK) has announced that it will pay a dividend of $0.06 per share on the 23rd of November. Including this payment, the dividend yield on the stock will be 1.0%, which is a modest boost for shareholders' returns.
Check out the opportunities and risks within the US Banks industry.
Capital Bancorp's Payment Expected To Have Solid Earnings Coverage
If it is predictable over a long period, even low dividend yields can be attractive.
Currently, Capital Bancorp does not yet have a history of paying dividends out, with this being its first year doing so. Despite Capital Bancorp only paying out for the first time, calculating for the company's payout ratio shows a percentage of 1.6%, a great sign for the sustainability of the company's dividend for the future.
The next 3 years are set to see EPS grow by 4.5%. Analysts estimate the future payout ratio will be 7.2% over the same time period, which is in the range that makes us comfortable with the sustainability of the dividend.
Capital Bancorp Doesn't Have A Long Payment History
Without a track record of dividend payments, we can't make a judgement on how stable it has been. This doesn't mean that the company can't pay a good dividend, but just that we want to wait until it can prove itself.
The Dividend Looks Likely To Grow
Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Capital Bancorp has impressed us by growing EPS at 37% per year over the past five years. Earnings per share is growing at a solid clip, and the payout ratio is low which we think is an ideal combination in a dividend stock as the company can quite easily raise the dividend in the future.
We Really Like Capital Bancorp's Dividend
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 easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. All in all, this checks a lot of the boxes we look for when choosing an income stock.
Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. However, there are other things to consider for investors when analysing stock performance. Earnings growth generally bodes well for the future value of company dividend payments. See if the 4 Capital Bancorp analysts we track are forecasting continued growth with our free report on analyst estimates for the company. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.
What are the risks and opportunities for Capital Bancorp?
Trading at 73.3% below our estimate of its fair value
Earnings have grown 35.4% per year over the past 5 years
No risks detected for CBNK from our risks checks.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.