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MetroCity Bankshares' (NASDAQ:MCBS) Dividend Will Be Increased To $0.18

Simply Wall St
·3 min read

MetroCity Bankshares, Inc. (NASDAQ:MCBS) will increase its dividend from last year's comparable payment on the 12th of May to $0.18. This will take the dividend yield to an attractive 4.4%, providing a nice boost to shareholder returns.

Check out our latest analysis for MetroCity Bankshares

MetroCity Bankshares' Dividend Forecasted To Be Well Covered By Earnings

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable.

Having paid out dividends for 7 years, MetroCity Bankshares has a good history of paying out a part of its earnings to shareholders. Taking data from its last earnings report, calculating for the company's payout ratio of 27%shows that MetroCity Bankshares would be able to pay its last dividend without pressure on the balance sheet.

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EPS is set to fall by 0.1% over the next 12 months. But assuming the dividend continues along recent trends, we believe the future payout ratio could be 32%, which we are pretty comfortable with and we think would be feasible on an earnings basis.

historic-dividend
historic-dividend

MetroCity Bankshares Doesn't Have A Long Payment History

MetroCity Bankshares' 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. The dividend has gone from an annual total of $0.12 in 2016 to the most recent total annual payment of $0.72. This implies that the company grew its distributions at a yearly rate of about 29% 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.

We Could See MetroCity Bankshares' Dividend Growing

Investors could be attracted to the stock based on the quality of its payment history. We are encouraged to see that MetroCity Bankshares has grown earnings per share at 8.3% per year over the past three years. MetroCity Bankshares definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

Our Thoughts On MetroCity Bankshares' Dividend

In summary, it's great to see that the company can raise the dividend and keep it in a sustainable range. The dividend has been at reasonable levels historically, but that hasn't translated into a consistent payment. Taking all of this into consideration, the dividend looks viable moving forward, but investors should be mindful that the company has pushed the boundaries of sustainability in the past and may do so again.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Just as an example, we've come across 2 warning signs for MetroCity Bankshares you should be aware of, and 1 of them makes us a bit uncomfortable. Is MetroCity Bankshares 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.

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