C&F Financial's (NASDAQ:CFFI) Shareholders Will Receive A Bigger Dividend Than Last Year

The board of C&F Financial Corporation (NASDAQ:CFFI) has announced that it will be paying its dividend of $0.42 on the 1st of October, an increased payment from last year's comparable dividend. This makes the dividend yield about the same as the industry average at 3.5%.

Check out our latest analysis for C&F Financial

C&F Financial's Dividend Forecasted To Be Well Covered By Earnings

Solid dividend yields are great, but they only really help us if the payment is sustainable.

Having distributed dividends for at least 10 years, C&F Financial has a long history of paying out a part of its earnings to shareholders. Using data from its latest earnings report, C&F Financial's payout ratio sits at 22%, an extremely comfortable number that shows that it can pay its dividend.

If the trend of the last few years continues, EPS will grow by 14.3% over the next 12 months. If the dividend continues along recent trends, we estimate the future payout ratio will be 20%, which is in the range that makes us comfortable with the sustainability of the dividend.

C&F Financial Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. Since 2012, the dividend has gone from $1.04 total annually to $1.68. This means that it has been growing its distributions at 4.9% per annum over that time. While the consistency in the dividend payments is impressive, we think the relatively slow rate of growth is less attractive.

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. C&F Financial has impressed us by growing EPS at 14% per year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for C&F Financial's prospects of growing its dividend payments in the future.

C&F Financial Looks Like A Great Dividend Stock

Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. Distributions are quite easily covered by earnings, which are also being converted to cash flows. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. However, there are other things to consider for investors when analysing stock performance. 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. Is C&F Financial not quite the opportunity you were looking for? Why not check out our selection of top 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.