United Security Bancshares (NASDAQ:UBFO) Is Due To Pay A Dividend Of $0.12

The board of United Security Bancshares (NASDAQ:UBFO) has announced that it will pay a dividend on the 22nd of April, with investors receiving $0.12 per share. The dividend yield will be 5.3% based on this payment which is still above the industry average.

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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 8 years. Past distributions do not necessarily guarantee future ones, but United Security Bancshares' payout ratio of 56% is a good sign for current shareholders as this means that earnings decently cover dividends.

Unless the company can turn things around, EPS could fall by 0.9% over the next year. Assuming the dividend continues along recent trends, we believe the future payout ratio could be 62%, which we are pretty comfortable with and we think is feasible on an earnings basis.

View our latest analysis for United Security Bancshares

United Security Bancshares Is Still Building Its Track Record

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 dividend has gone from $0.20 total annually to $0.48. This implies that the company grew its distributions at a yearly rate of about 12% 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.

United Security Bancshares May Find It Hard To Grow The Dividend

Investors could be attracted to the stock based on the quality of its payment history. Let's not jump to conclusions as things might not be as good as they appear on the surface. United Security Bancshares hasn't seen much change in its earnings per share over the last five years.

In Summary

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about United Security Bancshares' payments, as there could be some issues with sustaining them into the future. The company hasn't been paying a very consistent dividend over time, despite only paying out a small portion of earnings. We would be a touch cautious of relying on this stock primarily for the dividend income.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. You can also discover whether shareholders are aligned with insider interests by checking our visualisation of insider shareholdings and trades in United Security Bancshares stock. 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.