MetroCity Bankshares (NASDAQ:MCBS) Is Increasing Its Dividend To $0.18
The board of MetroCity Bankshares, Inc. (NASDAQ:MCBS) has announced that it will be increasing its dividend by 20% on the 10th of February to $0.18, up from last year's comparable payment of $0.15. This takes the annual payment to 2.9% of the current stock price, which is about average for the industry.
Check out our latest analysis for MetroCity Bankshares
MetroCity Bankshares' Payment Expected To Have Solid Earnings Coverage
We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue.
MetroCity Bankshares has a good history of paying out dividends, with its current track record at 7 years. Using data from its latest earnings report, MetroCity Bankshares' payout ratio sits at 21%, an extremely comfortable number that shows that it can pay its dividend.
EPS is set to fall by 12.3% over the next 3 years. Despite that, analysts estimate the future payout ratio could be 27% over the same time period, which is in a pretty comfortable range.
MetroCity Bankshares 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. The dividend has gone from an annual total of $0.12 in 2016 to the most recent total annual payment of $0.60. This implies that the company grew its distributions at a yearly rate of about 26% 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 MetroCity Bankshares has been growing its earnings per share at 15% a 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.
We Really Like MetroCity Bankshares' Dividend
In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. The distributions are easily covered by earnings, and there is plenty of cash being generated as well. We should point out that the earnings are expected to fall over the next 12 months, which won't be a problem if this doesn't become a trend, but could cause some turbulence in the next year. All of these factors considered, we think this has solid potential as a dividend stock.
It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. However, there are other things to consider for investors when analysing stock performance. Just as an example, we've come across 2 warning signs for MetroCity Bankshares you should be aware of, and 1 of them doesn't sit too well with us. 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.
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