CF Bankshares (NASDAQ:CFBK) Will Pay A Larger Dividend Than Last Year At $0.09
CF Bankshares Inc. (NASDAQ:CFBK) will increase its dividend from last year's comparable payment on the 26th of January to $0.09. This takes the annual payment to 1.3% of the current stock price, which unfortunately is below what the industry is paying.
CF Bankshares' Dividend Forecasted To Be Well Covered By Earnings
The dividend yield is a little bit low, but sustainability of the payments is also an important part of evaluating an income stock.
Having paid out dividends for 5 years, CF Bankshares has a good history of paying out a part of its earnings to shareholders. Using data from its latest earnings report, CF Bankshares' payout ratio sits at 12%, an extremely comfortable number that shows that it can pay its dividend.
Over the next 3 years, EPS is forecast to expand by 100.4%. Analysts estimate the future payout ratio will be 7.7% over the same time period, which is in the range that makes us comfortable with the sustainability of the dividend.
View our latest analysis for CF Bankshares
CF Bankshares Is Still Building Its Track Record
The dividend's track record has been pretty solid, but with only 5 years of history we want to see a few more years of history before making any solid conclusions. Since 2021, the dividend has gone from $0.12 total annually to $0.32. This means that it has been growing its distributions at 22% per annum over that time. It is always nice to see strong dividend growth, but with such a short payment history we wouldn't be inclined to rely on it until a longer track record can be developed.
Dividend Growth May Be Hard To Come By
Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. However, initial appearances might be deceiving. CF Bankshares has seen earnings per share falling at 9.3% per year over the last five years. A modest decline in earnings isn't great, and it makes it quite unlikely that the dividend will grow in the future unless that trend can be reversed. However, the next year is actually looking up, with earnings set to rise. We would just wait until it becomes a pattern before getting too excited.
Our Thoughts On CF Bankshares' Dividend
In summary, while it's always good to see the dividend being raised, we don't think CF Bankshares' payments are rock solid. The low payout ratio is a redeeming feature, but generally we are not too happy with the payments CF Bankshares has been making. We would be a touch cautious of relying on this stock primarily for the dividend income.
Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. 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 CF Bankshares in our latest insider ownership analysis. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.
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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.