Meridian (NASDAQ:MRBK) Has Announced A Dividend Of $0.125

The board of Meridian Corporation (NASDAQ:MRBK) has announced that it will pay a dividend on the 17th of November, with investors receiving $0.125 per share. This means that the annual payment will be 3.3% of the current stock price, which is in line with the average for the industry.

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Meridian's Earnings Will Easily Cover The Distributions

We like a dividend to be consistent over the long term, so checking whether it is sustainable is important.

Meridian has established itself as a dividend paying company, given its 5-year history of distributing earnings to shareholders. Past distributions do not necessarily guarantee future ones, but Meridian's payout ratio of 28% is a good sign for current shareholders as this means that earnings decently cover dividends.

Over the next year, EPS could expand by 1.3% if recent trends continue. If the dividend continues along recent trends, we estimate the future payout ratio will be 34%, which is in the range that makes us comfortable with the sustainability of the dividend.

Check out our latest analysis for Meridian

Meridian Doesn't Have A Long Payment History

Meridian's dividend has been pretty stable for a little while now, but we will continue to be cautious until it has been demonstrated for a few more years. The dividend has gone from an annual total of $0.25 in 2020 to the most recent total annual payment of $0.50. This works out to be a compound annual growth rate (CAGR) of approximately 15% a year over that time. Meridian has been growing its dividend quite rapidly, which is exciting. However, the short payment history makes us question whether this performance will persist across a full market cycle.

Dividend Growth May Be Hard To Achieve

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Meridian hasn't seen much change in its earnings per share over the last five years. While EPS growth is quite low, Meridian has the option to increase the payout ratio to return more cash to shareholders.

Our Thoughts On Meridian's Dividend

In summary, we are pleased with the dividend remaining consistent, and we think there is a good chance of this continuing in the future. While the payout ratios are a good sign, we are less enthusiastic about the company's dividend record. The payment isn't stellar, but it could make a decent addition to a dividend portfolio.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. However, there are other things to consider for investors when analysing stock performance. For example, we've picked out 1 warning sign for Meridian that investors should know about before committing capital to this stock. 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.