Meridian (NASDAQ:MRBK) Is Paying Out A Dividend Of $0.125

Meridian Corporation (NASDAQ:MRBK) will pay a dividend of $0.125 on the 19th of May. This means the dividend yield will be fairly typical at 3.6%.

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Meridian's Earnings Will Easily Cover The Distributions

While it is always good to see a solid dividend yield, we should also consider whether the payment is feasible.

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 35% is a good sign for current shareholders as this means that earnings decently cover dividends.

Over the next year, EPS is forecast to expand by 24.6%. If the dividend continues along recent trends, we estimate the future payout ratio will be 35%, which is in the range that makes us comfortable with the sustainability of the dividend.

View 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 annual payment during the last 5 years was $0.25 in 2020, and the most recent fiscal year payment was $0.50. This implies that the company grew its distributions at a yearly rate of about 15% 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

Investors could be attracted to the stock based on the quality of its payment history. We are encouraged to see that Meridian has grown earnings per share at 11% per year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for Meridian's prospects of growing its dividend payments in the future.

We Really Like Meridian's Dividend

Overall, we like to see the dividend staying consistent, and we think Meridian might even raise payments in the future. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All in all, this checks a lot of the boxes we look for when choosing an income stock.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. See if management have their own wealth at stake, by checking insider shareholdings in Meridian stock. 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.