Eagle Bancorp (NASDAQ:EGBN) Has Affirmed Its Dividend Of $0.45

Eagle Bancorp, Inc. (NASDAQ:EGBN) will pay a dividend of $0.45 on the 31st of October. Based on this payment, the dividend yield on the company's stock will be 8.5%, which is an attractive boost to shareholder returns.

View our latest analysis for Eagle Bancorp

Eagle Bancorp's Payment Expected To Have Solid Earnings Coverage

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable.

Eagle Bancorp is just starting to establish itself as being able to pay dividends to shareholders, given its short 4-year history of distributing earnings. Based on Eagle Bancorp's last earnings report, calculating for its payout ratio equates to 43%, which means that the company covered its last dividend with comfortable room to spare.

Looking forward, earnings per share is forecast to fall by 32.5% over the next 3 years. However, as estimated by analysts, the future payout ratio could be 65% over the same time period, which we think the company can easily maintain.

Eagle Bancorp Is Still Building Its Track Record

The dividend hasn't seen any major cuts in the past, but the company has only been paying a dividend for 4 years, which isn't that long in the grand scheme of things. Since 2019, the annual payment back then was $0.88, compared to the most recent full-year payment of $1.80. This means that it has been growing its distributions at 20% per annum over that time. Eagle Bancorp has been growing its dividend quite rapidly, which is exciting. However, the short payment history makes us question whether this performance will persist across a full market cycle.

We Could See Eagle Bancorp's Dividend Growing

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Eagle Bancorp has seen EPS rising for the last five years, at 5.1% per annum. The company is paying a reasonable amount of earnings to shareholders, and is growing earnings at a decent rate so we think it could be a decent dividend stock.

In Summary

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Eagle Bancorp's payments, as there could be some issues with sustaining them into the future. The company hasn't been paying a very consistent dividend over time, despite only paying out a small portion of earnings. We would probably look elsewhere for an income investment.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Case in point: We've spotted 3 warning signs for Eagle Bancorp (of which 1 doesn't sit too well with us!) you should know about. 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.