Old Point Financial (NASDAQ:OPOF) Is Paying Out A Dividend Of $0.14

The board of Old Point Financial Corporation (NASDAQ:OPOF) has announced that it will pay a dividend of $0.14 per share on the 29th of March. This payment means that the dividend yield will be 3.4%, which is around the industry average.

See our latest analysis for Old Point Financial

Old Point Financial's Payment Expected To Have Solid Earnings Coverage

Solid dividend yields are great, but they only really help us if the payment is sustainable.

Old Point Financial has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. Past distributions do not necessarily guarantee future ones, but Old Point Financial's payout ratio of 36% is a good sign as this means that earnings decently cover dividends.

If the trend of the last few years continues, EPS will grow by 9.9% over the next 12 months. Assuming the dividend continues along recent trends, we think the future payout ratio could be 36% by next year, which is in a pretty sustainable range.

Old Point Financial Has A Solid Track Record

The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. The annual payment during the last 10 years was $0.20 in 2014, and the most recent fiscal year payment was $0.56. This means that it has been growing its distributions at 11% per annum over that time. So, dividends have been growing pretty quickly, and even more impressively, they haven't experienced any notable falls during this period.

The Dividend Has Growth Potential

The company's investors will be pleased to have been receiving dividend income for some time. Old Point Financial has impressed us by growing EPS at 9.9% per year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for Old Point Financial's prospects of growing its dividend payments in the future.

We Really Like Old Point Financial's Dividend

Overall, we think that this is a great income investment, and we think that maintaining the dividend this year may have been a conservative choice. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. All of these factors considered, we think this has solid potential as a dividend stock.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. However, there are other things to consider for investors when analysing stock performance. Taking the debate a bit further, we've identified 1 warning sign for Old Point Financial that investors need to be conscious of moving forward. 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.