<!-- HTML_TAG_START -->NasdaqGS:FULT Historic Dividend December 21st 2024<!-- HTML_TAG_END -->
United Security Bancshares’ (NASDAQ:UBFO) investors are due to receive a payment of $0.12 per share on 17th of January. Based on this payment, the dividend yield on the company’s stock will be 4.7%, which is an attractive boost to shareholder returns.
Check out our latest analysis for United Security Bancshares
We like to see robust dividend yields, but that doesn’t matter if the payment isn’t sustainable.
United Security Bancshares has established itself as a dividend paying company, given its 8-year history of distributing earnings to shareholders. Taking data from its last earnings report, calculating for the company’s payout ratio of 47%shows that United Security Bancshares would be able to pay its last dividend without pressure on the balance sheet.
If the trend of the last few years continues, EPS will grow by 1.3% over the next 12 months. If the dividend continues along recent trends, we estimate the future payout ratio will be 51%, which is in the range that makes us comfortable with the sustainability of the dividend.
The dividend’s track record has been pretty solid, but with only 8 years of history we want to see a few more years of history before making any solid conclusions. The dividend has gone from an annual total of $0.20 in 2016 to the most recent total annual payment of $0.48. This works out to be a compound annual growth rate (CAGR) of approximately 12% a year over that time. 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.
Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Although it’s important to note that United Security Bancshares’ 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. Growth of 1.3% per annum is not particularly high, which might explain why the company is paying out a higher proportion of earnings. This could mean the dividend doesn’t have the growth potential we look for going into the future.
In summary, we are pleased with the dividend remaining consistent, and we think there is a good chance of this continuing in the future. While the payout ratios are a good sign, we are less enthusiastic about the company’s dividend record. This looks like it could be a good dividend stock going forward, but we would note that the payout ratio has been at higher levels in the past so it could happen again.
