Central Valley Community Bancorp (NASDAQ:CVCY) Is Paying Out A Dividend Of $0.12

The board of Central Valley Community Bancorp (NASDAQ:CVCY) has announced that it will pay a dividend on the 17th of November, with investors receiving $0.12 per share. This means the annual payment will be 3.0% of the current stock price, which is lower than the industry average.

Check out our latest analysis for Central Valley Community Bancorp

Central Valley Community Bancorp's 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 distributed dividends for at least 10 years, Central Valley Community Bancorp has a long history of paying out a part of its earnings to shareholders. While past records don't necessarily translate into future results, the company's payout ratio of 21% also shows that Central Valley Community Bancorp is able to comfortably pay dividends.

Looking forward, EPS is forecast to rise by 31.9% over the next 3 years. Analysts forecast the future payout ratio could be 23% over the same time horizon, which is a number we think the company can maintain.

Dividend Volatility

While the company has been paying a dividend for a long time, it has cut the dividend at least once in the last 10 years. The dividend has gone from an annual total of $0.20 in 2013 to the most recent total annual payment of $0.48. This means that it has been growing its distributions at 9.1% per annum 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 see if earnings per share is growing. We are encouraged to see that Central Valley Community Bancorp has grown earnings per share at 14% per year over the past five years. Central Valley Community Bancorp definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

Central Valley Community Bancorp Looks Like A Great Dividend Stock

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. 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.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For instance, we've picked out 1 warning sign for Central Valley Community Bancorp 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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