Eagle Bancorp Montana (NASDAQ:EBMT) Has Affirmed Its Dividend Of $0.1425

Eagle Bancorp Montana, Inc. (NASDAQ:EBMT) has announced that it will pay a dividend of $0.1425 per share on the 6th of December. This payment means that the dividend yield will be 3.5%, which is around the industry average.

Check out our latest analysis for Eagle Bancorp Montana

Eagle Bancorp Montana's Payment Expected To Have Solid Earnings Coverage

We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue.

Eagle Bancorp Montana has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. While past data isn't a guarantee for the future, Eagle Bancorp Montana's latest earnings report puts its payout ratio at 13%, showing that the company can pay out its dividends comfortably.

The next 3 years are set to see EPS grow by 83.0%. The future payout ratio could be 34% over that time period, according to analyst estimates, which is a good look for the future of the dividend.

Eagle Bancorp Montana Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. The annual payment during the last 10 years was $0.29 in 2014, and the most recent fiscal year payment was $0.57. This works out to be a compound annual growth rate (CAGR) of approximately 7.0% a year over that time. The dividend has been growing very nicely for a number of years, and has given its shareholders some nice income in their portfolios.

Dividend Growth May Be Hard To Come By

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. However, things aren't all that rosy. Over the past five years, it looks as though Eagle Bancorp Montana's EPS has declined at around 7.6% a year. Declining earnings will inevitably lead to the company paying a lower dividend in line with lower profits. Earnings are predicted to grow over the next year, but we would remain cautious until a track record of earnings growth is established.

Our Thoughts On Eagle Bancorp Montana's Dividend

Overall, a consistent dividend is a good thing, and we think that Eagle Bancorp Montana has the ability to continue this into the future. With shrinking earnings, the company may see some issues maintaining the dividend even though they look pretty sustainable for now. Taking all of this into consideration, the dividend looks viable moving forward, but investors should be mindful that the company has pushed the boundaries of sustainability in the past and may do so again.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. 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 Eagle Bancorp Montana that investors should take into consideration. Is Eagle Bancorp Montana 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.