Yahoo Finance United Security Bancshares (NASDAQ:UBFO) Will Pay A Dividend Of $0.12
United Security Bancshares (NASDAQ:UBFO) has announced that it will pay a dividend of $0.12 per share on the 23rd of July. This means the annual payment is 6.6% of the current stock price, which is above the average for the industry.
See our latest analysis for United Security Bancshares
United Security Bancshares' Dividend Forecasted To Be Well Covered By Earnings
If the payments aren't sustainable, a high yield for a few years won't matter that much.
United Security Bancshares has a good history of paying out dividends, with its current track record at 7 years. Past distributions do not necessarily guarantee future ones, but United Security Bancshares' payout ratio of 45% is a good sign for current shareholders as this means that earnings decently cover dividends.
Over the next year, EPS could expand by 3.2% if recent trends continue. Assuming the dividend continues along recent trends, we think the future payout ratio could be 50% by next year, which is in a pretty sustainable range.
United Security Bancshares Is Still Building Its Track Record
It is great to see that United Security Bancshares has been paying a stable dividend for a number of years now, however we want to be a bit cautious about whether this will remain true through a full economic cycle. Since 2017, the dividend has gone from $0.20 total annually to $0.48. This works out to be a compound annual growth rate (CAGR) of approximately 13% a year 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.
The Dividend's Growth Prospects Are Limited
Investors could be attracted to the stock based on the quality of its payment history. Earnings have grown at around 3.2% a year for the past five years, which isn't massive but still better than seeing them shrink. United Security Bancshares is struggling to find viable investments, so it is returning more to shareholders. While this isn't necessarily a negative, it definitely signals that dividend growth could be constrained in the future unless earnings start to pick up again.
In Summary
Overall, a consistent dividend is a good thing, and we think that United Security Bancshares has the ability to continue this into the future. While the payout ratios are a good sign, we are less enthusiastic about the company's dividend record. The dividend looks okay, but there have been some issues in the past, so we would be a little bit cautious.
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. For example, we've picked out 1 warning sign for United Security Bancshares that investors should know about before committing capital to this stock. 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.
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