CF Bankshares Inc. (NASDAQ:CFBK) will increase its dividend from last year's comparable payment on the 21st of July to $0.08. This takes the annual payment to 1.2% of the current stock price, which unfortunately is below what the industry is paying.

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CF Bankshares' Earnings Will Easily Cover The Distributions

If it is predictable over a long period, even low dividend yields can be attractive.

Having paid out dividends for 5 years, CF Bankshares has a good history of paying out a part of its earnings to shareholders. Using data from its latest earnings report, CF Bankshares' payout ratio sits at 11%, an extremely comfortable number that shows that it can pay its dividend.

Looking forward, earnings per share is forecast to rise by 22.2% over the next year. Assuming the dividend continues along recent trends, we think the future payout ratio could be 14% by next year, which is in a pretty sustainable range.

Check out our latest analysis for CF Bankshares

CF Bankshares Is Still Building Its Track Record

It is great to see that CF Bankshares 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. The dividend has gone from an annual total of $0.12 in 2020 to the most recent total annual payment of $0.28. This means that it has been growing its distributions at 18% per annum 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.

Dividend Growth May Be Hard To Achieve

The company's investors will be pleased to have been receiving dividend income for some time. Earnings per share has been crawling upwards at 2.7% per year. While EPS growth is quite low, CF Bankshares has the option to increase the payout ratio to return more cash to shareholders.

In Summary

Overall, this is a reasonable dividend, and it being raised is an added bonus. While the payout ratios are a good sign, we are less enthusiastic about the company's dividend record. The payment isn't stellar, but it could make a decent addition to a dividend portfolio.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. You can also discover whether shareholders are aligned with insider interests by checking our visualisation of insider shareholdings and trades in CF Bankshares stock. Is CF Bankshares not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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