Mid-Southern Bancorp (NASDAQ:MSVB) Has Announced A Dividend Of US$0.03

The board of Mid-Southern Bancorp, Inc. (NASDAQ:MSVB) has announced that it will pay a dividend on the 27th of August, with investors receiving US$0.03 per share. This payment means the dividend yield will be 0.7%, which is below the average for the industry.

View our latest analysis for Mid-Southern Bancorp

Mid-Southern Bancorp's Dividend Is 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. Before making this announcement, Mid-Southern Bancorp was easily earning enough to cover the dividend. As a result, a large proportion of what it earned was being reinvested back into the business.

Looking forward, EPS could fall by 1.0% if the company can't turn things around from the last few years. Assuming the dividend continues along recent trends, we believe the payout ratio could be 27%, which we are pretty comfortable with and we think is feasible on an earnings basis.

Mid-Southern Bancorp's Dividend Has Lacked Consistency

Even in its relatively short history, the company has reduced the dividend at least once. This suggests that the dividend might not be the most reliable. Since 2014, the first annual payment was US$0.22, compared to the most recent full-year payment of US$0.12. This works out to be a decline of approximately 8.5% per year over that time. A company that decreases its dividend over time generally isn't what we are looking for.

Mid-Southern Bancorp May Find It Hard To Grow The Dividend

Dividends have been going in the wrong direction, so we definitely want to see a different trend in the earnings per share. However, Mid-Southern Bancorp's EPS was effectively flat over the past five years, which could stop the company from paying more every year.

In Summary

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Mid-Southern Bancorp's payments, as there could be some issues with sustaining them into the future. In the past, the payments have been unstable, but over the short term the dividend could be reliable, with the company generating enough cash to cover it. We don't think Mid-Southern Bancorp is a great stock to add to your portfolio if income is your focus.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For instance, we've picked out 1 warning sign for Mid-Southern Bancorp that investors should take into consideration. Looking for more high-yielding dividend ideas? Try our curated list of strong dividend payers.

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