Shore Bancshares, Inc.'s (NASDAQ:SHBI) investors are due to receive a payment of US$0.12 per share on 31st of August. This means that the annual payment will be 2.7% of the current stock price, which is in line with the average for the industry.
See our latest analysis for Shore Bancshares
Shore Bancshares' Dividend Is Well Covered By Earnings
Solid dividend yields are great, but they only really help us if the payment is sustainable. However, Shore Bancshares' earnings easily cover the dividend. This means that most of what the business earns is being used to help it grow.
Over the next year, EPS is forecast to expand by 0.7%. If the dividend continues along recent trends, we estimate the payout ratio will be 49%, which is in the range that makes us comfortable with the sustainability of the dividend.
Dividend Volatility
The company has a long dividend track record, but it doesn't look great with cuts in the past. Since 2011, the first annual payment was US$0.24, compared to the most recent full-year payment of US$0.48. This works out to be a compound annual growth rate (CAGR) of approximately 7.2% a year over that time. We have seen cuts in the past, so while the growth looks promising we would be a little bit cautious about its track record.
The Dividend Looks Likely To Grow
With a relatively unstable dividend, it's even more important to see if earnings per share is growing. It's encouraging to see Shore Bancshares has been growing its earnings per share at 13% a year over the past five years. Shore Bancshares definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.
We Really Like Shore Bancshares' Dividend
Overall, we like to see the dividend staying consistent, and we think Shore Bancshares might even raise payments in the future. Earnings are easily covering distributions, and the company is generating plenty of cash. All of these factors considered, we think this has solid potential as a dividend 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 example, we've picked out 1 warning sign for Shore Bancshares that investors should know about before committing capital to this stock. We have also put together a list of global stocks with a solid dividend.
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This article by Simply Wall St is general in nature. 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.
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About NasdaqGS:SHBI
Shore Bancshares
Operates as a bank holding company for the Shore United Bank, N.A.
Flawless balance sheet with solid track record.
