First US Bancshares (NASDAQ:FUSB) Is Due To Pay A Dividend Of $0.05

First US Bancshares, Inc. (NASDAQ:FUSB) will pay a dividend of $0.05 on the 2nd of January. Including this payment, the dividend yield on the stock will be 2.2%, which is a modest boost for shareholders' returns.

Check out our latest analysis for First US Bancshares

First US Bancshares' Dividend Forecasted To Be Well Covered By Earnings

Even a low dividend yield can be attractive if it is sustained for years on end.

First US Bancshares has established itself as a dividend paying company, given its 9-year history of distributing earnings to shareholders. While past records don't necessarily translate into future results, the company's payout ratio of 14% also shows that First US Bancshares is able to comfortably pay dividends.

Looking forward, earnings per share could rise by 26.5% over the next year if the trend from the last few years continues. If the dividend continues on this path, the future payout ratio could be 12% by next year, which we think can be pretty sustainable going forward.

First US Bancshares Doesn't Have A Long Payment History

The dividend's track record has been pretty solid, but with only 9 years of history we want to see a few more years of history before making any solid conclusions. Since 2014, the annual payment back then was $0.04, compared to the most recent full-year payment of $0.20. This works out to be a compound annual growth rate (CAGR) of approximately 20% a year over that time. The dividend has been growing rapidly, however with such a short payment history we can't know for sure if payment can continue to grow over the long term, so caution may be warranted.

The Dividend Looks Likely To Grow

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. It's encouraging to see that First US Bancshares has been growing its earnings per share at 27% a year over the past five years. A low payout ratio gives the company a lot of flexibility, and growing earnings also make it very easy for it to grow the dividend.

First US Bancshares Looks Like A Great Dividend Stock

Overall, we like to see the dividend staying consistent, and we think First US Bancshares might even raise payments in the future. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. All of these factors considered, we think this has solid potential as a dividend stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. However, there are other things to consider for investors when analysing stock performance. For example, we've picked out 2 warning signs for First US Bancshares that investors should know about before committing capital to this stock. 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.