Merchants Bancorp (NASDAQ:MBIN) Has Announced That It Will Be Increasing Its Dividend To $0.09

Merchants Bancorp's (NASDAQ:MBIN) dividend will be increasing from last year's payment of the same period to $0.09 on 1st of April. This takes the annual payment to 0.9% of the current stock price, which is about average for the industry.

See our latest analysis for Merchants Bancorp

Merchants Bancorp's Dividend Forecasted To Be Well Covered By Earnings

We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue.

Merchants Bancorp has established itself as a dividend paying company, given its 6-year history of distributing earnings to shareholders. While past records don't necessarily translate into future results, the company's payout ratio of 5.7% also shows that Merchants Bancorp is able to comfortably pay dividends.

The next 3 years are set to see EPS grow by 0.8%. Analysts forecast the future payout ratio could be 7.0% over the same time horizon, which is a number we think the company can maintain.

Merchants Bancorp Doesn't Have A Long Payment History

Even though the company has been paying a consistent dividend for a while, we would like to see a few more years before we feel comfortable relying on it. Since 2018, the dividend has gone from $0.133 total annually to $0.36. This works out to be a compound annual growth rate (CAGR) of approximately 18% 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 Looks Likely To Grow

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Merchants Bancorp has seen EPS rising for the last five years, at 33% per annum. Rapid earnings growth and a low payout ratio suggest this company has been effectively reinvesting in its business. Should that continue, this company could have a bright future.

We Really Like Merchants Bancorp's Dividend

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. 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. Are management backing themselves to deliver performance? Check their shareholdings in Merchants Bancorp in our latest insider ownership analysis. Is Merchants Bancorp 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.