Plumas Bancorp (NASDAQ:PLBC) Is Increasing Its Dividend To $0.30

Plumas Bancorp (NASDAQ:PLBC) has announced that it will be increasing its periodic dividend on the 17th of February to $0.30, which will be 11% higher than last year's comparable payment amount of $0.27. This takes the annual payment to 2.4% of the current stock price, which unfortunately is below what the industry is paying.

View our latest analysis for Plumas Bancorp

Plumas Bancorp's Earnings Will Easily Cover The Distributions

The dividend yield is a little bit low, but sustainability of the payments is also an important part of evaluating an income stock.

Plumas Bancorp has established itself as a dividend paying company, given its 8-year history of distributing earnings to shareholders. While past records don't necessarily translate into future results, the company's payout ratio of 22% also shows that Plumas Bancorp is able to comfortably pay dividends.

Looking forward, EPS is forecast to rise by 31.5% over the next 3 years. Analysts estimate the future payout ratio will be 20% over the same time period, which is in the range that makes us comfortable with the sustainability of the dividend.

Plumas Bancorp Doesn't Have A Long Payment History

Even though the company has been paying a consistent dividend for a while, we would like to see a few more years before we feel comfortable relying on it. The annual payment during the last 8 years was $0.20 in 2017, and the most recent fiscal year payment was $1.08. This implies that the company grew its distributions at a yearly rate of about 23% over that duration. Plumas Bancorp 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.

The Dividend Looks Likely To Grow

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. It's encouraging to see that Plumas Bancorp has been growing its earnings per share at 10% a year over the past five years. Growth in EPS bodes well for the dividend, as does the low payout ratio that the company is currently reporting.

Plumas Bancorp Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that Plumas Bancorp is a strong income stock thanks to its track record and growing earnings. 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 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. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. You can also discover whether shareholders are aligned with insider interests by checking our visualisation of insider shareholdings and trades in Plumas Bancorp stock. Is Plumas Bancorp not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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