Virginia National Bankshares (NASDAQ:VABK) Will Pay A Dividend Of $0.30

The board of Virginia National Bankshares Corporation (NASDAQ:VABK) has announced that it will pay a dividend on the 23rd of September, with investors receiving $0.30 per share. Based on this payment, the dividend yield on the company's stock will be 3.7%, which is an attractive boost to shareholder returns.

Check out our latest analysis for Virginia National Bankshares

Virginia National Bankshares' Dividend Forecasted To Be Well Covered By Earnings

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

Virginia National Bankshares has a good history of paying out dividends, with its current track record at 9 years. Past distributions do not necessarily guarantee future ones, but Virginia National Bankshares' payout ratio of 34% is a good sign for current shareholders as this means that earnings decently cover dividends.

Over the next year, EPS could expand by 7.4% if recent trends continue. If the dividend continues along recent trends, we estimate the future payout ratio will be 37%, which is in the range that makes us comfortable with the sustainability of the dividend.

Virginia National Bankshares Doesn't Have A Long Payment History

It is great to see that Virginia National Bankshares has been paying a stable dividend for a number of years now, however we want to be a bit cautious about whether this will remain true through a full economic cycle. Since 2013, the dividend has gone from $0.181 total annually to $1.20. This works out to be a compound annual growth rate (CAGR) of approximately 23% a year over that time. It is always nice to see strong dividend growth, but with such a short payment history we wouldn't be inclined to rely on it until a longer track record can be developed.

The Dividend Has Growth Potential

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Virginia National Bankshares has seen EPS rising for the last five years, at 7.4% per annum. Growth in EPS bodes well for the dividend, as does the low payout ratio that the company is currently reporting.

In Summary

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

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For instance, we've picked out 1 warning sign for Virginia National Bankshares that investors should take into consideration. Is Virginia National Bankshares 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.