United Security Bancshares (NASDAQ:UBFO) Has Affirmed Its Dividend Of $0.11

The board of United Security Bancshares (NASDAQ:UBFO) has announced that it will pay a dividend of $0.11 per share on the 21st of April. This means the annual payment is 6.9% of the current stock price, which is above the average for the industry.

See our latest analysis for United Security Bancshares

United Security Bancshares' Dividend Forecasted To Be Well Covered By Earnings

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable.

United Security Bancshares has a good history of paying out dividends, with its current track record at 6 years. Taking data from its last earnings report, calculating for the company's payout ratio of 48%shows that United Security Bancshares would be able to pay its last dividend without pressure on the balance sheet.

Over the next year, EPS could expand by 12.3% if recent trends continue. If the dividend continues on this path, the future payout ratio could be 49% by next year, which we think can be pretty sustainable going forward.

United Security Bancshares Doesn't Have A Long Payment History

The dividend's track record has been pretty solid, but with only 6 years of history we want to see a few more years of history before making any solid conclusions. The annual payment during the last 6 years was $0.20 in 2017, and the most recent fiscal year payment was $0.44. This works out to be a compound annual growth rate (CAGR) of approximately 14% a year 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

The company's investors will be pleased to have been receiving dividend income for some time. It's encouraging to see that United Security Bancshares has been growing its earnings per share at 12% a year over the past five years. Since earnings per share is growing at an acceptable rate, and the payout policy is balanced, we think the company is positioning itself well to grow earnings and dividends in the future.

United Security Bancshares Looks Like A Great Dividend Stock

Overall, we like to see the dividend staying consistent, and we think United Security Bancshares might even raise payments in the future. Earnings are easily covering distributions, and the company is generating plenty of cash. Taking this all into consideration, this looks like it could be a good dividend opportunity.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For example, we've identified 2 warning signs for United Security Bancshares (1 shouldn't be ignored!) that you should be aware of before investing. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.