Merchants Bancorp (NASDAQ:MBIN) Is Due To Pay A Dividend Of $0.08

Merchants Bancorp (NASDAQ:MBIN) will pay a dividend of $0.08 on the 2nd of October. This means the dividend yield will be fairly typical at 1.1%.

See our latest analysis for Merchants Bancorp

Merchants Bancorp's Earnings Will Easily Cover The Distributions

We like a dividend to be consistent over the long term, so checking whether it is sustainable is important.

Merchants Bancorp has established itself as a dividend paying company, given its 5-year history of distributing earnings to shareholders. Using data from its latest earnings report, Merchants Bancorp's payout ratio sits at 6.3%, an extremely comfortable number that shows that it can pay its dividend.

Over the next year, EPS is forecast to fall by 0.2%. But assuming the dividend continues along recent trends, we believe the future payout ratio could be 7.7%, which we are pretty comfortable with and we think would be feasible on an earnings basis.

Merchants Bancorp Doesn't Have A Long Payment History

Merchants Bancorp's 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 2018, the annual payment back then was $0.133, compared to the most recent full-year payment of $0.32. This implies that the company grew its distributions at a yearly rate of about 19% 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.

The Dividend Looks Likely To Grow

Investors could be attracted to the stock based on the quality of its payment history. It's encouraging to see that Merchants Bancorp has been growing its earnings per share at 26% a year over the past five years. A low payout ratio gives the company a lot of flexibility, and growing earnings also make it very easy for it to grow the dividend.

We Really Like Merchants Bancorp'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 distributions are easily covered by earnings, and there is plenty of cash being generated as well. However, it is worth noting that the earnings are expected to fall over the next year, which may not change the long term outlook, but could affect the dividend payment in the next 12 months. All of these factors considered, we think this has solid potential as a dividend stock.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For instance, we've picked out 1 warning sign for Merchants Bancorp that investors should take into consideration. Is Merchants Bancorp not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.