CF Bankshares (NASDAQ:CFBK) Is Paying Out A Dividend Of $0.06

The board of CF Bankshares Inc. (NASDAQ:CFBK) has announced that it will pay a dividend of $0.06 per share on the 1st of August. Including this payment, the dividend yield on the stock will be 1.5%, which is a modest boost for shareholders' returns.

Check out our latest analysis for CF Bankshares

CF Bankshares' Earnings Will Easily Cover The Distributions

While yield is important, another factor to consider about a company's dividend is whether the current payout levels are feasible.

Having paid out dividends for only 3 years, CF Bankshares does not have much of a history being a dividend paying company. While it has a shorter history of paying out dividends, CF Bankshares' payout ratio of 6.7% is a great sign for current shareholders, as this means that earnings greatly cover dividends.

Over the next year, EPS is forecast to fall by 6.9%. But if the dividend continues along the path it has been on recently, we estimate the future payout ratio could be 8.6%, which would be comfortable for the company to continue in the future.

CF Bankshares Doesn't Have A Long Payment History

The dividend hasn't seen any major cuts in the past, but the company has only been paying a dividend for 3 years, which isn't that long in the grand scheme of things. The annual payment during the last 3 years was $0.12 in 2020, and the most recent fiscal year payment was $0.24. This works out to be a compound annual growth rate (CAGR) of approximately 26% a year over that time. It is always nice to see strong dividend growth, but with such a short payment history we wouldn't be inclined to rely on it until a longer track record can be developed.

The Dividend Looks Likely To Grow

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. We are encouraged to see that CF Bankshares has grown earnings per share at 51% per year over the past five years. Rapid earnings growth and a low payout ratio suggest this company has been effectively reinvesting in its business. Should that continue, this company could have a bright future.

We Really Like CF Bankshares' Dividend

Overall, we like to see the dividend staying consistent, and we think CF Bankshares might even raise payments in the future. The distributions are easily covered by earnings, and there is plenty of cash being generated as well. 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 in all, this checks a lot of the boxes we look for when choosing an income stock.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For instance, we've picked out 1 warning sign for CF Bankshares that investors should take into consideration. 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.