RBB Bancorp's (NASDAQ:RBB) Upcoming Dividend Will Be Larger Than Last Year's

RBB Bancorp (NASDAQ:RBB) will increase its dividend from last year's comparable payment on the 12th of May to $0.16. This makes the dividend yield 4.7%, which is above the industry average.

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. RBB Bancorp's stock price has reduced by 33% in the last 3 months, which is not ideal for investors and can explain a sharp increase in the dividend yield.

See our latest analysis for RBB Bancorp

RBB Bancorp's Dividend Forecasted To Be Well Covered By Earnings

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained.

RBB Bancorp has a good history of paying out dividends, with its current track record at 5 years. While past data isn't a guarantee for the future, RBB Bancorp's latest earnings report puts its payout ratio at 17%, showing that the company can pay out its dividends comfortably.

EPS is set to fall by 39.0% over the next 3 years. Fortunately, analysts forecast the future payout ratio to be 23% over the same time horizon, which is in the range that makes us comfortable with the sustainability of the dividend.

RBB Bancorp's Dividend Has Lacked Consistency

RBB Bancorp has been paying dividends for a while, but the track record isn't stellar. Due to this, we are a little bit cautious about the dividend consistency over a full economic cycle. The annual payment during the last 5 years was $0.32 in 2018, and the most recent fiscal year payment was $0.64. This works out to be a compound annual growth rate (CAGR) of approximately 15% a year over that time. Dividends have grown rapidly over this time, but with cuts in the past we are not certain that this stock will be a reliable source of income in the future.

The Dividend Looks Likely To Grow

With a relatively unstable dividend, it's even more important to evaluate if earnings per share is growing, which could point to a growing dividend in the future. We are encouraged to see that RBB Bancorp has grown earnings per share at 13% per year over the past five years. RBB Bancorp definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

We Really Like RBB Bancorp's Dividend

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 company is generating plenty of cash, and the earnings also quite easily cover the distributions. 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. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. To that end, RBB Bancorp has 2 warning signs (and 1 which is a bit concerning) 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.