Glen Burnie Bancorp (NASDAQ:GLBZ) Has Announced A Dividend Of $0.10

Glen Burnie Bancorp (NASDAQ:GLBZ) has announced that it will pay a dividend of $0.10 per share on the 5th of August. This means the annual payment is 8.0% of the current stock price, which is above the average for the industry.

See our latest analysis for Glen Burnie Bancorp

Glen Burnie Bancorp Not Expected To Earn Enough To Cover Its Payments

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

Having distributed dividends for at least 10 years, Glen Burnie Bancorp has a long history of paying out a part of its earnings to shareholders. But while this history shows that the company was able to sustain its dividend for a decent period of time, its most recent earnings report shows that the company did not make enough earnings to cover its dividend payout. This is very worrying for shareholders, as this shows that Glen Burnie Bancorp will not be able to sustain its dividend at its current rate.

If the company can't turn things around, EPS could fall by 7.9% over the next year. If the dividend continues along recent trends, we estimate the future payout ratio could reach 126%, which could put the dividend in jeopardy if the company's earnings don't improve.

Dividend Volatility

Although the company has a long dividend history, it has been cut at least once in the last 10 years. The most recent annual payment of $0.40 is about the same as the annual payment 10 years ago. The dividend has seen some fluctuations in the past, so even though the dividend was raised this year, we should remember that it has been cut in the past.

Dividend Growth May Be Hard To Come By

Given that the dividend has been cut in the past, we need to check if earnings are growing and if that might lead to stronger dividends in the future. It's not great to see that Glen Burnie Bancorp's earnings per share has fallen at approximately 7.9% per year over the past five years. A modest decline in earnings isn't great, and it makes it quite unlikely that the dividend will grow in the future unless that trend can be reversed.

We're Not Big Fans Of Glen Burnie Bancorp's Dividend

Overall, while some might be pleased that the dividend wasn't cut, we think this may help Glen Burnie Bancorp make more consistent payments in the future. The company's earnings aren't high enough to be making such big distributions, and it isn't backed up by strong growth or consistency either. Considering all of these factors, we wouldn't rely on this dividend if we wanted to live on the income.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For example, we've picked out 3 warning signs for Glen Burnie Bancorp that investors should know about before committing capital to this stock. Is Glen Burnie Bancorp 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.

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