Central Valley Community Bancorp (NASDAQ:CVCY) Has Affirmed Its Dividend Of $0.12

The board of Central Valley Community Bancorp (NASDAQ:CVCY) has announced that it will pay a dividend of $0.12 per share on the 20th of August. Based on this payment, the dividend yield will be 3.0%, which is fairly typical for the industry.

View our latest analysis for Central Valley Community Bancorp

Central Valley Community Bancorp's Earnings Will Easily Cover the Distributions

We like a dividend to be consistent over the long term, so checking whether it is sustainable is important.

Central Valley Community Bancorp has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. Using data from its latest earnings report, Central Valley Community Bancorp's payout ratio sits at 22%, an extremely comfortable number that shows that it can pay its dividend.

Over the next year, EPS is forecast to expand by 15.0%. If the dividend continues along recent trends, we estimate the future payout ratio will be 22%, which is in the range that makes us comfortable with the sustainability of the dividend.

Dividend Volatility

The company has a long dividend track record, but it doesn't look great with cuts in the past. The dividend has gone from an annual total of $0.20 in 2012 to the most recent total annual payment of $0.48. This works out to be a compound annual growth rate (CAGR) of approximately 9.1% a year over that time. It's good to see the dividend growing at a decent rate, but the dividend has been cut at least once in the past. Central Valley Community Bancorp might have put its house in order since then, but we remain cautious.

The Dividend Looks Likely To Grow

With a relatively unstable dividend, it's even more important to evaluate if earnings per share is growing, which could point to a growing dividend in the future. Central Valley Community Bancorp has impressed us by growing EPS at 12% per year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for Central Valley Community Bancorp's prospects of growing its dividend payments in the future.

We Really Like Central Valley Community Bancorp's Dividend

In summary, it is good to see that the dividend is staying consistent, and we don't think there is any reason to suspect this might change over the medium term. Earnings are easily covering distributions, and the company is generating plenty of cash. All in all, this checks a lot of the boxes we look for when choosing an income stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Taking the debate a bit further, we've identified 1 warning sign for Central Valley Community Bancorp that investors need to be conscious of moving forward. 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.