United Security Bancshares (NASDAQ:UBFO) Is Paying Out A Larger Dividend Than Last Year

United Security Bancshares' (NASDAQ:UBFO) periodic dividend will be increasing on the 24th of July to $0.12, with investors receiving 9.1% more than last year's $0.11. This makes the dividend yield 6.6%, which is above the industry average.

See our latest analysis for United Security Bancshares

United Security Bancshares' Payment Expected To Have Solid Earnings Coverage

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

United Security Bancshares has established itself as a dividend paying company, given its 6-year history of distributing earnings to shareholders. Based on United Security Bancshares' last earnings report, the payout ratio is at a decent 39%, meaning that the company is able to pay out its dividend with a bit of room to spare.

If the trend of the last few years continues, EPS will grow by 13.8% over the next 12 months. If the dividend continues on this path, the future payout ratio could be 40% 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 2017 to the most recent total annual payment of $0.44. This means that it has been growing its distributions at 14% per annum over that time. United Security Bancshares has been growing its dividend quite rapidly, which is exciting. However, the short payment history makes us question whether this performance will persist across a full market cycle.

The Dividend Looks Likely To Grow

The company's investors will be pleased to have been receiving dividend income for some time. United Security Bancshares has seen EPS rising for the last five years, at 14% per annum. A low payout ratio and decent growth suggests that the company is reinvesting well, and it also has plenty of room to increase the dividend over time.

United Security Bancshares Looks Like A Great Dividend Stock

Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. 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.

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. For instance, we've picked out 1 warning sign for United Security Bancshares that investors should take into consideration. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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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.