Eagle Bancorp Montana (NASDAQ:EBMT) Has Announced A 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 7th of March. Based on this payment, the dividend yield will be 3.7%, which is fairly typical for the industry.

Check out our latest analysis for Eagle Bancorp Montana

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

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

Having distributed dividends for at least 10 years, Eagle Bancorp Montana has a long history of paying out a part of its earnings to shareholders. Based on Eagle Bancorp Montana's last earnings report, the payout ratio is at a decent 52%, meaning that the company is able to pay out its dividend with a bit of room to spare.

Over the next 3 years, EPS is forecast to expand by 55.7%. The future payout ratio could be 33% 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 2015, 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. Companies like this can be very valuable over the long term, if the decent rate of growth can be maintained.

Dividend Growth May Be Hard To Come By

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Let's not jump to conclusions as things might not be as good as they appear on the surface. In the last five years, Eagle Bancorp Montana's earnings per share has shrunk at approximately 5.9% per annum. If the company is making less over time, it naturally follows that it will also have to pay out less in dividends. Earnings are predicted to grow over the next year, but we would remain cautious until a track record of earnings growth is established.

In Summary

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.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.