Macatawa Bank (NASDAQ:MCBC) Is Paying Out A Dividend Of $0.08

The board of Macatawa Bank Corporation (NASDAQ:MCBC) has announced that it will pay a dividend on the 28th of February, with investors receiving $0.08 per share. This means the dividend yield will be fairly typical at 2.9%.

View our latest analysis for Macatawa Bank

Macatawa Bank's Dividend Forecasted To Be Well Covered By Earnings

While it is always good to see a solid dividend yield, we should also consider whether the payment is feasible.

Having paid out dividends for 9 years, Macatawa Bank has a good history of paying out a part of its earnings to shareholders. Based on Macatawa Bank's last earnings report, the payout ratio is at a decent 32%, meaning that the company is able to pay out its dividend with a bit of room to spare.

Looking forward, EPS is forecast to rise by 36.1% over the next 3 years. The future payout ratio could be 27% 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

The dividend's track record has been pretty solid, but with only 9 years of history we want to see a few more years of history before making any solid conclusions. Since 2014, the annual payment back then was $0.08, compared to the most recent full-year payment of $0.32. This means that it has been growing its distributions at 17% per annum over that time. It is always nice to see strong dividend growth, but with such a short payment history we wouldn't be inclined to rely on it until a longer track record can be developed.

The Dividend Looks Likely To Grow

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Macatawa Bank has seen EPS rising for the last five years, at 16% per annum. A low payout ratio and decent growth suggests that the company is reinvesting well, and it also has plenty of room to increase the dividend over time.

We Really Like Macatawa Bank's Dividend

Overall, we like to see the dividend staying consistent, and we think Macatawa Bank might even raise payments in the future. Earnings are easily covering distributions, and the company is generating plenty of cash. Taking this all into consideration, this looks like it could be a good dividend opportunity.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For instance, we've picked out 1 warning sign for Macatawa Bank that investors should take into consideration. 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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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.