Village Bank and Trust Financial's (NASDAQ:VBFC) Upcoming Dividend Will Be Larger Than Last Year's

Village Bank and Trust Financial Corp.'s (NASDAQ:VBFC) dividend will be increasing from last year's payment of the same period to $0.16 on 17th of March. Even though the dividend went up, the yield is still quite low at only 1.1%.

View our latest analysis for Village Bank and Trust Financial

Village Bank and Trust Financial's Dividend Forecasted To Be Well Covered By Earnings

Even a low dividend yield can be attractive if it is sustained for years on end.

Given that this is the first year that Village Bank and Trust Financial is paying out a dividend, we are not yet able to make an analysis based on the company's dividend paying history. Despite Village Bank and Trust Financial only paying out for the first time, calculating for the company's payout ratio shows a percentage of 10%, a great sign for the sustainability of the company's dividend for the future.

Looking forward, earnings per share could rise by 44.7% over the next year if the trend from the last few years continues. If the dividend continues on this path, the future payout ratio could be 7.4% by next year, which we think can be pretty sustainable going forward.

Village Bank and Trust Financial Is Still Building Its Track Record

It is tough to make a judgement on how stable a dividend is when the company hasn't been paying one for very long. This doesn't mean that the company can't pay a good dividend, but just that we want to wait until it can prove itself.

The Dividend Looks Likely To Grow

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. It's encouraging to see that Village Bank and Trust Financial has been growing its earnings per share at 45% a year over the past five years. Earnings per share is growing at a solid clip, and the payout ratio is low which we think is an ideal combination in a dividend stock as the company can quite easily raise the dividend in the future.

We Really Like Village Bank and Trust Financial's Dividend

Overall, a dividend increase is always good, and we think that Village Bank and Trust Financial is a strong income stock thanks to its track record and growing earnings. Earnings are easily covering distributions, and the company is generating plenty of cash. Taking this all into consideration, this looks like it could be a good dividend opportunity.

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. For example, we've identified 2 warning signs for Village Bank and Trust Financial (1 doesn't sit too well with us!) that you should be aware of before investing. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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

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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