Ohio Valley Banc (NASDAQ:OVBC) Is Paying Out A Larger Dividend Than Last Year

The board of Ohio Valley Banc Corp. (NASDAQ:OVBC) has announced that the dividend on 10th of May will be increased to $0.23, which will be 4.5% higher than last year's payment of $0.22 which covered the same period. This takes the annual payment to 2.5% of the current stock price, which unfortunately is below what the industry is paying.

While the dividend yield is important for income investors, it is also important to consider any large share price moves, as this will generally outweigh any gains from distributions. Investors will be pleased to see that Ohio Valley Banc's stock price has increased by 52% in the last 3 months, which is good for shareholders and can also explain a decrease in the dividend yield.

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Ohio Valley Banc's Earnings Will Easily Cover The Distributions

Even a low dividend yield can be attractive if it is sustained for years on end.

Ohio Valley Banc has a long history of paying out dividends, with its current track record at a minimum of 10 years. Taking data from its last earnings report, calculating for the company's payout ratio shows 38%, which means that Ohio Valley Banc would be able to pay its last dividend without pressure on the balance sheet.

Looking forward, earnings per share could rise by 2.4% over the next year if the trend from the last few years continues. If the dividend continues on this path, the future payout ratio could be 38% by next year, which we think can be pretty sustainable going forward.

Check out our latest analysis for Ohio Valley Banc

Ohio Valley Banc Has A Solid Track Record

The company has an extended history of paying stable dividends. The dividend has gone from an annual total of $0.84 in 2015 to the most recent total annual payment of $0.88. Dividend payments have grown at less than 1% a year over this period. Dividends have grown relatively slowly, which is not great, but some investors may value the relative consistency of the dividend.

Dividend Growth May Be Hard To Achieve

The company's investors will be pleased to have been receiving dividend income for some time. Earnings has been rising at 2.4% per annum over the last five years, which admittedly is a bit slow. While EPS growth is quite low, Ohio Valley Banc has the option to increase the payout ratio to return more cash to shareholders.

Ohio Valley Banc Looks Like A Great Dividend Stock

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. 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. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. However, there are other things to consider for investors when analysing stock performance. You can also discover whether shareholders are aligned with insider interests by checking our visualisation of insider shareholdings and trades in Ohio Valley Banc stock. Is Ohio Valley Banc not quite the opportunity you were looking for? Why not check out our selection of top 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.