C&F Financial's (NASDAQ:CFFI) Dividend Will Be $0.44

C&F Financial Corporation (NASDAQ:CFFI) has announced that it will pay a dividend of $0.44 per share on the 1st of July. Based on this payment, the dividend yield on the company's stock will be 3.9%, which is an attractive boost to shareholder returns.

See our latest analysis for C&F Financial

C&F Financial's Earnings Will Easily Cover The Distributions

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable.

C&F Financial has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. Past distributions do not necessarily guarantee future ones, but C&F Financial's payout ratio of 29% is a good sign as this means that earnings decently cover dividends.

Over the next year, EPS could expand by 3.7% if recent trends continue. If the dividend continues on this path, the future payout ratio could be 29% by next year, which we think can be pretty sustainable going forward.

C&F Financial Has A Solid Track Record

The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. Since 2014, the annual payment back then was $1.16, compared to the most recent full-year payment of $1.76. This works out to be a compound annual growth rate (CAGR) of approximately 4.3% a year over that time. While the consistency in the dividend payments is impressive, we think the relatively slow rate of growth is less attractive.

C&F Financial May Find It Hard To Grow The Dividend

Investors could be attracted to the stock based on the quality of its payment history. However, C&F Financial has only grown its earnings per share at 3.7% per annum over the past five years. While EPS growth is quite low, C&F Financial has the option to increase the payout ratio to return more cash to shareholders.

We Really Like C&F Financial's Dividend

Overall, we like to see the dividend staying consistent, and we think C&F Financial might even raise payments in the future. Distributions are quite easily covered by earnings, which are also being converted to cash flows. 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. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Now, if you want to look closer, it would be worth checking out our free research on C&F Financial management tenure, salary, and performance. 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.