United Security Bancshares (NASDAQ:UBFO) Has Announced A Dividend Of $0.11

The board of United Security Bancshares (NASDAQ:UBFO) has announced that it will pay a dividend on the 19th of January, with investors receiving $0.11 per share. This means the annual payment is 6.2% of the current stock price, which is above the average for the industry.

Check out our latest analysis for United Security Bancshares

United Security Bancshares' Earnings Will Easily Cover The Distributions

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

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 55%shows that United Security Bancshares would be able to pay its last dividend without pressure on the balance sheet.

Looking forward, earnings per share could rise by 9.7% over the next year if the trend from the last few years continues. If the dividend continues on this path, the future payout ratio could be 58% by next year, which we think can be pretty sustainable going forward.

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. The dividend has gone from an annual total of $0.20 in 2016 to the most recent total annual payment of $0.44. This works out to be a compound annual growth rate (CAGR) of approximately 14% a year over that time. The dividend has been growing rapidly, however with such a short payment history we can't know for sure if payment can continue to grow over the long term, so caution may be warranted.

United Security Bancshares Could Grow Its Dividend

Investors could be attracted to the stock based on the quality of its payment history. We are encouraged to see that United Security Bancshares has grown earnings per share at 9.7% per 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.

We Really Like United Security Bancshares' Dividend

Overall, we think that this is a great income investment, and we think that maintaining the dividend this year may have been a conservative choice. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. However, there are other things to consider for investors when analysing stock performance. For example, we've identified 2 warning signs for United Security Bancshares (1 doesn't sit too well with us!) 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.