MetroCity Bankshares (NASDAQ:MCBS) Is Increasing Its Dividend To US$0.14

MetroCity Bankshares, Inc. (NASDAQ:MCBS) will increase its dividend on the 12th of November to US$0.14. Based on the announced payment, the dividend yield for the company will be 2.0%, which is fairly typical for the industry.

View our latest analysis for MetroCity Bankshares

MetroCity Bankshares' Dividend Is Well Covered By Earnings

We like a dividend to be consistent over the long term, so checking whether it is sustainable is important. Before making this announcement, MetroCity Bankshares was easily earning enough to cover the dividend. This means that most of its earnings are being retained to grow the business.

The next year is set to see EPS grow by 18.8%. Assuming the dividend continues along recent trends, we think the payout ratio could be 21% by next year, which is in a pretty sustainable range.

MetroCity Bankshares Doesn't Have A Long Payment History

The dividend's track record has been pretty solid, but with only 5 years of history we want to see a few more years of history before making any solid conclusions. The dividend has gone from US$0.12 in 2016 to the most recent annual payment of US$0.46. This means that it has been growing its distributions at 31% per annum over that time. The dividend has been growing rapidly, however with such a short payment history we can't know for sure if payment can continue to grow over the long term, so caution may be warranted.

We Could See MetroCity Bankshares' Dividend Growing

The company's investors will be pleased to have been receiving dividend income for some time. We are encouraged to see that MetroCity Bankshares has grown earnings per share at 7.6% per year over the past three years. MetroCity Bankshares definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

In Summary

Overall, it's great to see the dividend being raised and that it is still in a sustainable range. While the payout ratios are a good sign, we are less enthusiastic about the company's dividend record. This looks like it could be a good dividend stock going forward, but we would note that the payout ratio has been at higher levels in the past so it could happen again.

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 1 warning sign for MetroCity Bankshares that investors should know about before committing capital to this stock. Looking for more high-yielding dividend ideas? Try our curated list of strong dividend payers.

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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