Business First Bancshares (NASDAQ:BFST) Is Paying Out A Dividend Of $0.14

Business First Bancshares, Inc. (NASDAQ:BFST) will pay a dividend of $0.14 on the 30th of November. This means the annual payment will be 2.1% of the current stock price, which is lower than the industry average.

See our latest analysis for Business First Bancshares

Business First Bancshares’ Earnings Will Easily Cover The Distributions

While yield is important, another factor to consider about a company’s dividend is whether the current payout levels are feasible.

Business First Bancshares has established itself as a dividend paying company, given its 7-year history of distributing earnings to shareholders. While past records don’t necessarily translate into future results, the company’s payout ratio of 24% also shows that Business First Bancshares is able to comfortably pay dividends.

The next 3 years are set to see EPS grow by 52.7%. The future payout ratio could be 22% over that time period, according to analyst estimates, which is a good look for the future of the dividend.

Business First Bancshares Doesn’t Have A Long Payment History

Even though the company has been paying a consistent dividend for a while, we would like to see a few more years before we feel comfortable relying on it. Since 2017, the annual payment back then was $0.32, compared to the most recent full-year payment of $0.56. This implies that the company grew its distributions at a yearly rate of about 8.3% over that duration. Business First Bancshares has a nice track record of dividend growth but we would wait until we see a longer track record before getting too confident.

Business First Bancshares May Find It Hard To Grow The Dividend

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Earnings has been rising at 4.0% per annum over the last five years, which admittedly is a bit slow. Earnings growth is slow, but on the plus side, the dividend payout ratio is low and dividends could grow faster than earnings, if the company decides to increase its payout ratio.

An additional note is that the company has been raising capital by issuing stock equal to 16% of shares outstanding in the last 12 months. Regularly doing this can be detrimental – it’s hard to grow dividends per share when new shares are regularly being created.

In Summary

Overall, a consistent dividend is a good thing, and we think that Business First Bancshares has the ability to continue this into the future. The payout ratio looks good, but unfortunately the company’s dividend track record isn’t stellar. The dividend looks okay, but there have been some issues in the past, so we would be a little bit cautious.

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Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. As an example, we’ve identified 3 warning signs for Business First Bancshares that you should be aware of before investing. Is Business First Bancshares 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.