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Level One Bancorp (NASDAQ:LEVL) Is Due To Pay A Dividend Of US$0.06

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The board of Level One Bancorp, Inc. (NASDAQ:LEVL) has announced that it will pay a dividend of US$0.06 per share on the 15th of October. This means the annual payment will be 0.8% of the current stock price, which is lower than the industry average.

Check out our latest analysis for Level One Bancorp

Level One Bancorp's Earnings Easily Cover the Distributions

If it is predictable over a long period, even low dividend yields can be attractive. However, Level One Bancorp's earnings easily cover the dividend. As a result, a large proportion of what it earned was being reinvested back into the business.

Looking forward, earnings per share is forecast to fall by 4.9% over the next year. If the dividend continues along the path it has been on recently, we estimate the payout ratio could be 9.5%, which is comfortable for the company to continue in the future.

historic-dividend
historic-dividend

Level One Bancorp Doesn't Have A Long Payment History

The company has maintained a consistent dividend for a few years now, but we would like to see a longer track record before relying on it. The dividend has gone from US$0.12 in 2018 to the most recent annual payment of US$0.24. This works out to be a compound annual growth rate (CAGR) of approximately 26% a year over that time. Level One 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

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Level One Bancorp has seen EPS rising for the last five years, at 13% per annum. Growth in EPS bodes well for the dividend, as does the low payout ratio that the company is currently reporting.

We Really Like Level One Bancorp's Dividend

Overall, we like to see the dividend staying consistent, and we think Level One Bancorp might even raise payments in the future. 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 in all, this checks a lot of the boxes we look for when choosing an income stock.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For example, we've picked out 1 warning sign for Level One Bancorp that investors should know about before committing capital to this stock. If you are a dividend investor, you might also want to look at our curated list of high performing dividend stock.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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