MainStreet Bancshares (NASDAQ:MNSB) Has Affirmed Its Dividend Of $0.10

The board of MainStreet Bancshares, Inc. (NASDAQ:MNSB) has announced that it will pay a dividend on the 19th of November, with investors receiving $0.10 per share. This payment means the dividend yield will be 2.3%, which is below the average for the industry.

View our latest analysis for MainStreet Bancshares

MainStreet Bancshares' Dividend Forecasted To Be Well Covered By Earnings

It would be nice for the yield to be higher, but we should also check if higher levels of dividend payment would be sustainable.

Having paid out dividends for only 3 years, MainStreet Bancshares does not have much of a history being a dividend paying company. While it has a shorter history of paying out dividends, MainStreet Bancshares' payout ratio of 8.3% is a great sign for current shareholders, as this means that earnings greatly cover dividends.

The next 3 years are set to see EPS grow by 8.6%. The future payout ratio could be 36% over that time period, according to analyst estimates, which is a good look for the future of the dividend.

MainStreet Bancshares Is Still Building Its Track Record

The dividend hasn't seen any major cuts in the past, but the company has only been paying a dividend for 3 years, which isn't that long in the grand scheme of things. Since 2021, the annual payment back then was $0.20, compared to the most recent full-year payment of $0.40. This works out to be a compound annual growth rate (CAGR) of approximately 26% 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.

Dividend Growth May Be Hard To Come By

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. However, things aren't all that rosy. MainStreet Bancshares has seen earnings per share falling at 6.1% per year over the last five years. If earnings continue declining, the company may have to make the difficult choice of reducing the dividend or even stopping it completely - the opposite of dividend growth. It's not all bad news though, as the earnings are predicted to rise over the next 12 months - we would just be a bit cautious until this can turn into a longer term trend.

Our Thoughts On MainStreet Bancshares' Dividend

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about MainStreet Bancshares' payments, as there could be some issues with sustaining them into the future. The company hasn't been paying a very consistent dividend over time, despite only paying out a small portion of earnings. This company is not in the top tier of income providing stocks.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. 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 2 warning signs for MainStreet Bancshares that investors should know about before committing capital to this stock. Is MainStreet Bancshares not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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