RBB Bancorp (NASDAQ:RBB) Is Increasing Its Dividend To $0.16

RBB Bancorp's (NASDAQ:RBB) dividend will be increasing from last year's payment of the same period to $0.16 on 11th of August. This will take the dividend yield to an attractive 4.4%, providing a nice boost to shareholder returns.

Check out our latest analysis for RBB Bancorp

RBB Bancorp's Earnings Will Easily Cover The Distributions

A big dividend yield for a few years doesn't mean much if it can't be sustained.

Having paid out dividends for 6 years, RBB Bancorp has a good history of paying out a part of its earnings to shareholders. While past data isn't a guarantee for the future, RBB Bancorp's latest earnings report puts its payout ratio at 19%, showing that the company can pay out its dividends comfortably.

EPS is set to fall by 27.9% over the next 12 months. But if the dividend continues along recent trends, we estimate the future payout ratio could be 30%, which we would consider to be quite comfortable looking forward, with most of the company's earnings left over to grow the business in the future.

RBB Bancorp's Dividend Has Lacked Consistency

Looking back, RBB Bancorp's dividend hasn't been particularly consistent. This makes us cautious about the consistency of the dividend over a full economic cycle. Since 2017, the dividend has gone from $0.32 total annually to $0.64. This means that it has been growing its distributions at 12% per annum over that time. Despite the rapid growth in the dividend over the past number of years, we have seen the payments go down the past as well, so that makes us cautious.

The Dividend Looks Likely To Grow

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. RBB Bancorp has seen EPS rising for the last five years, at 10% per annum. A low payout ratio and decent growth suggests that the company is reinvesting well, and it also has plenty of room to increase the dividend over time.

RBB Bancorp Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that RBB Bancorp is a strong income stock thanks to its track record and growing earnings. The earnings easily cover the company's distributions, and the company is generating plenty of cash. We should point out that the earnings are expected to fall over the next 12 months, which won't be a problem if this doesn't become a trend, but could cause some turbulence in the next year. All of these factors considered, we think this has solid potential as a dividend stock.

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. To that end, RBB Bancorp has 2 warning signs (and 1 which makes us a bit uncomfortable) we think you should know about. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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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.