Macatawa Bank (NASDAQ:MCBC) Has Announced A Dividend Of $0.08

Macatawa Bank Corporation (NASDAQ:MCBC) has announced that it will pay a dividend of $0.08 per share on the 30th of November. This payment means that the dividend yield will be 3.0%, which is around the industry average.

See our latest analysis for Macatawa Bank

Macatawa Bank's Earnings Will Easily Cover The Distributions

Unless the payments are sustainable, the dividend yield doesn't mean too much.

Macatawa Bank has established itself as a dividend paying company, given its 9-year history of distributing earnings to shareholders. Based on Macatawa Bank's last earnings report, the payout ratio is at a decent 38%, meaning that the company is able to pay out its dividend with a bit of room to spare.

The next 3 years are set to see EPS grow by 39.2%. The future payout ratio could be 30% over that time period, according to analyst estimates, which is a good look for the future of the dividend.

Macatawa Bank Is Still Building Its Track Record

Even though the company has been paying a consistent dividend for a while, we would like to see a few more years before we feel comfortable relying on it. The annual payment during the last 9 years was $0.08 in 2013, and the most recent fiscal year payment was $0.32. This implies that the company grew its distributions at a yearly rate of about 17% over that duration. Macatawa Bank 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.

Macatawa Bank Could Grow Its Dividend

The company's investors will be pleased to have been receiving dividend income for some time. Macatawa Bank has seen EPS rising for the last five years, at 9.4% per annum. Macatawa Bank definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

Macatawa Bank Looks Like A Great Dividend Stock

In summary, it is good to see that the dividend is staying consistent, and we don't think there is any reason to suspect this might change over the medium term. 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.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For example, we've picked out 1 warning sign for Macatawa Bank that investors should know about before committing capital to this stock. Is Macatawa Bank not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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