Plumas Bancorp's (NASDAQ:PLBC) Dividend Will Be Increased 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. Although the dividend is now higher, the yield is only 2.3%, which is below the industry average.

See our latest analysis for Plumas Bancorp

Plumas Bancorp's Earnings Will Easily Cover The Distributions

If it is predictable over a long period, even low dividend yields can be attractive.

Having paid out dividends for 8 years, Plumas Bancorp has a good history of paying out a part of its earnings to shareholders. Using data from its latest earnings report, Plumas Bancorp's payout ratio sits at 22%, an extremely comfortable number that shows that it can pay its dividend.

Over the next 3 years, EPS is forecast to expand by 3.8%. Analysts forecast the future payout ratio could be 25% over the same time horizon, which is a number we think the company can maintain.

Plumas Bancorp Is Still Building Its Track Record

It is great to see that Plumas Bancorp has been paying a stable dividend for a number of years now, however we want to be a bit cautious about whether this will remain true through a full economic cycle. Since 2017, the annual payment back then was $0.20, compared to the most recent full-year payment of $1.08. This means that it has been growing its distributions at 23% per annum over that time. 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. Plumas Bancorp has impressed us by growing EPS at 10% per 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. Earnings are easily covering distributions, and the company is generating plenty of cash. 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. 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 Plumas Bancorp that investors should take into consideration. 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.