MainStreet Bancshares (NASDAQ:MNSB) Has Announced A Dividend Of $0.10

MainStreet Bancshares, Inc. (NASDAQ:MNSB) has announced that it will pay a dividend of $0.10 per share on the 14th of November. The dividend yield is 2.1% based on this payment, which is a little bit low compared to the other companies in the industry.

See 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.

MainStreet Bancshares has a short history of paying out dividends, with its current track record at only 2 years. Based on its last earnings report however, the payout ratio is at a comfortable 2.8%, meaning that MainStreet Bancshares may be able to sustain this dividend for future years if it continues on this earnings trend.

Over the next year, EPS is forecast to fall by 33.8%. But assuming the dividend continues along recent trends, we believe the future payout ratio could be 16%, which we are pretty comfortable with and we think would be feasible on an earnings basis.

MainStreet Bancshares Is Still Building Its Track Record

The company has maintained a consistent dividend for a few years now, but we would like to see a longer track record before relying on it. Since 2021, the annual payment back then was $0.20, compared to the most recent full-year payment of $0.40. This implies that the company grew its distributions at a yearly rate of about 41% over that duration. 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

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 28% per year over the past five years. Rapid earnings growth and a low payout ratio suggest this company has been effectively reinvesting in its business. Should that continue, this company could have a bright future.

MainStreet Bancshares Looks Like A Great Dividend Stock

In summary, it is good to see that the dividend is staying consistent, and we don't think there is any reason to suspect this might change over the medium term. The earnings easily cover the company's distributions, and the company is generating plenty of cash. If earnings do fall over the next 12 months, the dividend could be buffeted a little bit, but we don't think it should cause too much of a problem in the long term. All of these factors considered, we think this has solid potential as a dividend stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Case in point: We've spotted 2 warning signs for MainStreet Bancshares (of which 1 is a bit concerning!) you should know about. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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