Ohio Valley Banc (NASDAQ:OVBC) Has Announced A Dividend Of $0.22

Ohio Valley Banc Corp.'s (NASDAQ:OVBC) investors are due to receive a payment of $0.22 per share on 10th of May. This means that the annual payment will be 3.7% of the current stock price, which is in line with the average for the industry.

View our latest analysis for Ohio Valley Banc

Ohio Valley Banc's Payment Expected To Have Solid Earnings Coverage

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

Ohio Valley Banc has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. Past distributions do not necessarily guarantee future ones, but Ohio Valley Banc's payout ratio of 33% is a good sign as this means that earnings decently cover dividends.

Looking forward, earnings per share could rise by 0.8% over the next year if the trend from the last few years continues. If the dividend continues on this path, the future payout ratio could be 40% by next year, which we think can be pretty sustainable going forward.

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Ohio Valley Banc Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. The annual payment during the last 10 years was $0.84 in 2014, and the most recent fiscal year payment was $0.88. Its dividends have grown at less than 1% per annum over this time frame. While the consistency in the dividend payments is impressive, we think the relatively slow rate of growth is less attractive.

Dividend Growth May Be Hard To Achieve

Investors could be attracted to the stock based on the quality of its payment history. Although it's important to note that Ohio Valley Banc's earnings per share has basically not grown from where it was five years ago, which could erode the purchasing power of the dividend over time. While EPS growth is quite low, Ohio Valley Banc has the option to increase the payout ratio to return more cash to shareholders.

We Really Like Ohio Valley Banc's Dividend

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. All in all, this checks a lot of the boxes we look for when choosing an income stock.

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 Ohio Valley Banc in our latest insider ownership analysis. Is Ohio Valley Banc 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.