MetroCity Bankshares (NASDAQ:MCBS) Will Pay A Larger Dividend Than Last Year At $0.25

MetroCity Bankshares, Inc. (NASDAQ:MCBS) will increase its dividend from last year's comparable payment on the 8th of August to $0.25. Based on this payment, the dividend yield for the company will be 3.1%, which is fairly typical for the industry.

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MetroCity Bankshares' Earnings Will Easily Cover The Distributions

We aren't too impressed by dividend yields unless they can be sustained over time.

MetroCity Bankshares has established itself as a dividend paying company, given its 9-year history of distributing earnings to shareholders. While past data isn't a guarantee for the future, MetroCity Bankshares' latest earnings report puts its payout ratio at 17%, showing that the company can pay out its dividends comfortably.

The next year is set to see EPS grow by 18.1%. If the dividend continues on this path, the future payout ratio could be 35% by next year, which we think can be pretty sustainable going forward.

View our latest analysis for MetroCity Bankshares

MetroCity Bankshares 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 $0.12 in 2016, and the most recent fiscal year payment was $0.92. This works out to be a compound annual growth rate (CAGR) of approximately 25% a year over that time. We're not overly excited about the relatively short history of dividend payments, however the dividend is growing at a nice rate and we might take a closer look.

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. MetroCity Bankshares has impressed us by growing EPS at 10% per year over the past five years. Growth in EPS bodes well for the dividend, as does the low payout ratio that the company is currently reporting.

We Really Like MetroCity Bankshares' Dividend

Overall, a dividend increase is always good, and we think that MetroCity Bankshares is a strong income stock thanks to its track record and growing earnings. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. However, there are other things to consider for investors when analysing stock performance. Now, if you want to look closer, it would be worth checking out our free research on MetroCity Bankshares management tenure, salary, and performance. 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.