First US Bancshares (NASDAQ:FUSB) Is Paying Out A Dividend Of $0.03

The board of First US Bancshares, Inc. (NASDAQ:FUSB) has announced that it will pay a dividend on the 3rd of October, with investors receiving $0.03 per share. The dividend yield is 1.3% based on this payment, which is a little bit low compared to the other companies in the industry.

View our latest analysis for First US Bancshares

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

It would be nice for the yield to be higher, but we should also check if higher levels of dividend payment would be sustainable.

First US Bancshares has a good history of paying out dividends, with its current track record at 8 years. While past data isn't a guarantee for the future, First US Bancshares' latest earnings report puts its payout ratio at 14%, showing that the company can pay out its dividends comfortably.

Over the next year, EPS could expand by 34.7% if recent trends continue. Assuming the dividend continues along recent trends, we think the future payout ratio could be 11% by next year, which is in a pretty sustainable range.

First US Bancshares Is Still Building Its Track Record

It is great to see that First US Bancshares has been paying a stable dividend for a number of years now, however we want to be a bit cautious about whether this will remain true through a full economic cycle. The dividend has gone from an annual total of $0.04 in 2014 to the most recent total annual payment of $0.12. This means that it has been growing its distributions at 15% per annum over that time. First US Bancshares 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.

The Dividend Looks Likely To Grow

Investors could be attracted to the stock based on the quality of its payment history. It's encouraging to see that First US Bancshares has been growing its earnings per share at 35% a year over the past five years. Rapid earnings growth and a low payout ratio suggest this company has been effectively reinvesting in its business. Should that continue, this company could have a bright future.

First US Bancshares Looks Like A Great Dividend Stock

Overall, we think that this is a great income investment, and we think that maintaining the dividend this year may have been a conservative choice. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All in all, this checks a lot of the boxes we look for when choosing an income stock.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. However, there are other things to consider for investors when analysing stock performance. Taking the debate a bit further, we've identified 1 warning sign for First US Bancshares that investors need to be conscious of moving forward. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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