MainStreet Bancshares' (NASDAQ:MNSB) Dividend Will Be $0.10

MainStreet Bancshares, Inc. (NASDAQ:MNSB) has announced that it will pay a dividend of $0.10 per share on the 9th of February. Including this payment, the dividend yield on the stock will be 1.8%, which is a modest boost for shareholders' returns.

View our latest analysis for MainStreet Bancshares

MainStreet Bancshares' Dividend Forecasted To Be Well Covered By Earnings

If it is predictable over a long period, even low dividend yields can be attractive.

MainStreet Bancshares has a short history of paying out dividends, with its current track record at only 2 years. Despite the company's shorter dividend history however, calculating for its payout ratio of 11% shows that MainStreet Bancshares is able to comfortably pay dividends.

Looking forward, earnings per share is forecast to fall by 22.2% over the next year. But if the dividend continues along recent trends, we estimate the future payout ratio could be 15%, which we would consider to be quite comfortable looking forward, with most of the company's earnings left over to grow the business in the future.

MainStreet Bancshares Is Still Building Its Track Record

Looking back, the dividend has been stable, but the company hasn't been paying a dividend for very long so we can't be confident that the dividend will remain stable through all economic environments. The annual payment during the last 2 years was $0.20 in 2022, and the most recent fiscal year payment was $0.40. This works out to be a compound annual growth rate (CAGR) of approximately 41% a year 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

The company's investors will be pleased to have been receiving dividend income for some time. We are encouraged to see that MainStreet Bancshares has grown earnings per share at 19% per year over the past five years. MainStreet Bancshares definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

MainStreet Bancshares Looks Like A Great Dividend Stock

Overall, we like to see the dividend staying consistent, and we think MainStreet Bancshares might even raise payments in the future. The company is generating plenty of cash, and the earnings also quite easily cover the distributions. However, it is worth noting that the earnings are expected to fall over the next year, which may not change the long term outlook, but could affect the dividend payment in the next 12 months. Taking this all into consideration, this looks like it could be a good dividend opportunity.

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. Just as an example, we've come across 2 warning signs for MainStreet Bancshares you should be aware of, and 1 of them shouldn't be ignored. 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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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.