CF Bankshares (NASDAQ:CFBK) Is Increasing Its Dividend To $0.05

CF Bankshares Inc. (NASDAQ:CFBK) has announced that it will be increasing its dividend from last year's comparable payment on the 25th of October to $0.05. Even though the dividend went up, the yield is still quite low at only 0.9%.

View our latest analysis for CF Bankshares

CF Bankshares' Dividend Forecasted To Be Well Covered By Earnings

It would be nice for the yield to be higher, but we should also check if higher levels of dividend payment would be sustainable.

Having paid out dividends for only 2 years, CF Bankshares does not have much of a history being a dividend paying company. Despite the company's shorter dividend history however, calculating for its payout ratio of 5.4% shows that CF Bankshares is able to comfortably pay dividends.

The next year is set to see EPS grow by 5.0%. If the dividend continues on this path, the future payout ratio could be 6.2% by next year, which we think can be pretty sustainable going forward.

CF Bankshares Is Still Building Its Track Record

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. The annual payment during the last 2 years was $0.12 in 2020, and the most recent fiscal year payment was $0.20. This implies that the company grew its distributions at a yearly rate of about 29% over that duration. CF Bankshares has been growing its dividend quite rapidly, which is exciting. However, the short payment history makes us question whether this performance will persist across a full market cycle.

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. CF Bankshares has impressed us by growing EPS at 52% 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 CF Bankshares' Dividend

Overall, a dividend increase is always good, and we think that CF Bankshares is a strong income stock thanks to its track record and growing earnings. Earnings are easily covering distributions, and the company is generating plenty of cash. Taking this all into consideration, this looks like it could be a good dividend opportunity.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. You can also discover whether shareholders are aligned with insider interests by checking our visualisation of insider shareholdings and trades in CF Bankshares stock. 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.