United Security Bancshares (NASDAQ:UBFO) Has Affirmed Its Dividend Of $0.12

United Security Bancshares (NASDAQ:UBFO) has announced that it will pay a dividend of $0.12 per share on the 23rd of October. The dividend yield will be 5.6% based on this payment which is still above the industry average.

Check out our latest analysis for United Security Bancshares

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

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable.

Having paid out dividends for 7 years, United Security Bancshares has a good history of paying out a part of its earnings to shareholders. Past distributions do not necessarily guarantee future ones, but United Security Bancshares' payout ratio of 47% is a good sign for current shareholders as this means that earnings decently cover dividends.

Over the next year, EPS could expand by 2.1% if recent trends continue. Assuming the dividend continues along recent trends, we think the future payout ratio could be 51% by next year, which is in a pretty sustainable range.

United Security Bancshares Doesn't Have A Long Payment History

United Security Bancshares' dividend has been pretty stable for a little while now, but we will continue to be cautious until it has been demonstrated for a few more years. Since 2017, the annual payment back then was $0.20, compared to the most recent full-year payment of $0.48. This implies that the company grew its distributions at a yearly rate of about 13% over that duration. 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.

Dividend Growth May Be Hard To Achieve

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Earnings has been rising at 2.1% per annum over the last five years, which admittedly is a bit slow. The company has been growing at a pretty soft 2.1% per annum, and is paying out quite a lot of its earnings to shareholders. While this isn't necessarily a negative, it definitely signals that dividend growth could be constrained in the future unless earnings start to pick up again.

Our Thoughts On United Security Bancshares' Dividend

In summary, we are pleased with the dividend remaining consistent, and we think there is a good chance of this continuing in the future. The payout ratio looks good, but unfortunately the company's dividend track record isn't stellar. The payment isn't stellar, but it could make a decent addition to a dividend portfolio.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. As an example, we've identified 1 warning sign for United Security Bancshares that you should be aware of before investing. Is United Security Bancshares not quite the opportunity you were looking for? Why not check out our selection of top 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.