Merchants Bancorp (NASDAQ:MBIN) Will Pay A Dividend Of $0.08

Merchants Bancorp (NASDAQ:MBIN) will pay a dividend of $0.08 on the 3rd of July. Based on this payment, the dividend yield will be 1.3%, which is fairly typical for the industry.

Check out our latest analysis for Merchants Bancorp

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

Solid dividend yields are great, but they only really help us if the payment is sustainable.

Merchants Bancorp has established itself as a dividend paying company, given its 5-year history of distributing earnings to shareholders. While past records don't necessarily translate into future results, the company's payout ratio of 6.4% also shows that Merchants Bancorp is able to comfortably pay dividends.

The next year is set to see EPS grow by 2.5%. Assuming the dividend continues along recent trends, we think the future payout ratio could be 7.7% by next year, which is in a pretty sustainable range.

Merchants Bancorp Is Still Building Its Track Record

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 works out to be a compound annual growth rate (CAGR) of approximately 19% a year over that time. Merchants Bancorp 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. We are encouraged to see that Merchants Bancorp has grown earnings per share at 24% per year over the past five years. Earnings have been growing rapidly, and with a low payout ratio we think that the company could turn out to be a great dividend stock.

Merchants Bancorp Looks Like A Great Dividend Stock

In summary, it is good to see that the dividend is staying consistent, and we don't think there is any reason to suspect this might change over the medium term. 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. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Are management backing themselves to deliver performance? Check their shareholdings in Merchants Bancorp in our latest insider ownership analysis. If you are a dividend investor, you might also want to look at our curated list of high yield 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.