John Marshall Bancorp's (NASDAQ:JMSB) Upcoming Dividend Will Be Larger Than Last Year's

John Marshall Bancorp, Inc. (NASDAQ:JMSB) has announced that it will be increasing its dividend from last year's comparable payment on the 8th of July to $0.25. Despite this raise, the dividend yield of 1.5% is only a modest boost to shareholder returns.

View our latest analysis for John Marshall Bancorp

John Marshall Bancorp Will Pay Out More Than It Is Earning

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

Given that this is the first year that John Marshall Bancorp is paying out a dividend, we are not yet able to make an analysis based on the company's dividend paying history. While John Marshall Bancorp's efforts to pay out a dividend can be applauded, its latest earnings report actually shows that the company didn't have enough earnings to cover its dividends. This is worrying for investors as it points to John Marshall Bancorp's dividends being unsustainable in the long term.

If the company can't turn things around, EPS could fall by 26.1% over the next year. Assuming the dividend continues along recent trends, we believe the future payout ratio could reach 158%, which could put the dividend under pressure if earnings don't start to improve.

John Marshall Bancorp Doesn't Have A Long Payment History

Without a track record of dividend payments, we can't make a judgement on how stable it has been. This doesn't mean that the company can't pay a good dividend, but just that we want to wait until it can prove itself.

Dividend Growth Potential Is Shaky

The company's investors will be pleased to have been receiving dividend income for some time. Unfortunately things aren't as good as they seem. John Marshall Bancorp's EPS has fallen by approximately 26% per year during the past five years. Such rapid declines definitely have the potential to constrain dividend payments if the trend continues into the future.

We're Not Big Fans Of John Marshall Bancorp's Dividend

In summary, investors will like to be receiving a higher dividend, but we have some questions about whether it can be sustained over the long term. 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. Overall, the dividend is not reliable enough to make this a good income stock.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. 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 John Marshall Bancorp 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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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.