West Bancorporation (NASDAQ:WTBA) Is Due To Pay A Dividend Of $0.25

West Bancorporation, Inc. (NASDAQ:WTBA) will pay a dividend of $0.25 on the 22nd of November. 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 West Bancorporation

West Bancorporation's Dividend Forecasted To Be Well Covered By Earnings

A big dividend yield for a few years doesn't mean much if it can't be sustained.

Having distributed dividends for at least 10 years, West Bancorporation has a long history of paying out a part of its earnings to shareholders. Past distributions do not necessarily guarantee future ones, but West Bancorporation's payout ratio of 58% is a good sign as this means that earnings decently cover dividends.

If the trend of the last few years continues, EPS will grow by 1.7% over the next 12 months. If the dividend continues along recent trends, we estimate the future payout ratio will be 62%, which is in the range that makes us comfortable with the sustainability of the dividend.

West Bancorporation Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. Since 2013, the dividend has gone from $0.40 total annually to $1.00. This implies that the company grew its distributions at a yearly rate of about 9.6% over that duration. The growth of the dividend has been pretty reliable, so we think this can offer investors some nice additional income in their portfolio.

Dividend Growth May Be Hard To Achieve

The company's investors will be pleased to have been receiving dividend income for some time. West Bancorporation hasn't seen much change in its earnings per share over the last five years. Growth of 1.7% may indicate that the company has limited investment opportunity so it is returning its earnings to shareholders instead. This isn't necessarily bad, but we wouldn't expect rapid dividend growth in the future.

We Really Like West Bancorporation's 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. All in all, this checks a lot of the boxes we look for when choosing an income stock.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. You can also discover whether shareholders are aligned with insider interests by checking our visualisation of insider shareholdings and trades in West Bancorporation stock. 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.