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Community West Bancshares (NASDAQ:CWBC) will pay a dividend of $0.08 on the 31st of August. This means the annual payment will be 2.3% of the current stock price, which is lower than the industry average.
View our latest analysis for Community West Bancshares
Community West Bancshares' Payment Expected To Have Solid Earnings Coverage
While yield is important, another factor to consider about a company's dividend is whether the current payout levels are feasible.
Community West Bancshares has established itself as a dividend paying company, given its 9-year history of distributing earnings to shareholders. While past data isn't a guarantee for the future, Community West Bancshares' latest earnings report puts its payout ratio at 24%, showing that the company can pay out its dividends comfortably.
Over the next year, EPS is forecast to fall by 3.8%. But if the dividend continues along recent trends, we estimate the future payout ratio could be 29%, which we would consider to be quite comfortable looking forward, with most of the company's earnings left over to grow the business in the future.
Community West Bancshares Is Still Building Its Track Record
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. The dividend has gone from an annual total of $0.08 in 2014 to the most recent total annual payment of $0.32. This implies that the company grew its distributions at a yearly rate of about 17% over that duration. 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.
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. Community West Bancshares has impressed us by growing EPS at 13% per year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for Community West Bancshares' prospects of growing its dividend payments in the future.
Community West Bancshares Looks Like A Great Dividend Stock
Overall, we like to see the dividend staying consistent, and we think Community West Bancshares might even raise payments in the future. The company is generating plenty of cash, and the earnings also quite easily cover the distributions. 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.