LINKBANCORP (NASDAQ:LNKB) Is Due To Pay A Dividend Of $0.075

LINKBANCORP, Inc. (NASDAQ:LNKB) has announced that it will pay a dividend of $0.075 per share on the 16th of September. This means the annual payment is 4.7% of the current stock price, which is above the average for the industry.

See our latest analysis for LINKBANCORP

LINKBANCORP Might Find It Hard To Continue The Dividend

If the payments aren't sustainable, a high yield for a few years won't matter that much.

LINKBANCORP has a short history of paying out dividends, with its current track record at only 2 years. Past distributions unfortunately do not guarantee future ones, and LINKBANCORP's last earnings report actually showed that the company went over its net earnings in its total dividend distribution. This is worrying for investors as it points to LINKBANCORP's dividends being unsustainable in the long term.

Over the next year, EPS is forecast to expand by 84.3%. The company seems to be going down the right path, but it will take a little bit longer than a year to cross over into profitability. Unfortunately, for the dividend to continue at current levels the company definitely needs to get there sooner rather than later.

LINKBANCORP Is Still Building Its Track Record

The company has maintained a consistent dividend for a few years now, but we would like to see a longer track record before relying on it. The most recent annual payment of $0.30 is about the same as the annual payment 2 years ago. LINKBANCORP hasn't been paying a dividend for very long, so we wouldn't get to excited about its record of growth just yet.

Dividend Growth Potential Is Shaky

Investors could be attracted to the stock based on the quality of its payment history. However, things aren't all that rosy. LINKBANCORP's EPS has fallen by approximately 102% per year during the past five years. Dividend payments are likely to come under some pressure unless EPS can pull out of the nosedive it is in. On the bright side, earnings are predicted to gain some ground over the next year, but until this turns into a pattern we wouldn't be feeling too comfortable.

We should note that LINKBANCORP has issued stock equal to 130% of shares outstanding. Regularly doing this can be detrimental - it's hard to grow dividends per share when new shares are regularly being created.

LINKBANCORP's Dividend Doesn't Look Great

Overall, this isn't a great candidate as an income investment, even though the dividend was stable this year. The company seems to be stretching itself a bit to make such big payments, but it doesn't appear they can be consistent over time. The dividend doesn't inspire confidence that it will provide solid income in the future.

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. To that end, LINKBANCORP has 2 warning signs (and 1 which is concerning) we think you should know about. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

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