The board of OP Bancorp (NASDAQ:OPBK) has announced that it will pay a dividend on the 21st of August, with investors receiving $0.12 per share. This means that the annual payment will be 3.8% of the current stock price, which is in line with the average for the industry.

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OP Bancorp's Payment Expected To Have Solid Earnings Coverage

Solid dividend yields are great, but they only really help us if the payment is sustainable.

OP Bancorp has a good history of paying out dividends, with its current track record at 7 years. Past distributions do not necessarily guarantee future ones, but OP Bancorp's payout ratio of 32% is a good sign for current shareholders as this means that earnings decently cover dividends.

The next year is set to see EPS grow by 14.9%. If the dividend continues along recent trends, we estimate the future payout ratio will be 34%, which is in the range that makes us comfortable with the sustainability of the dividend.

See our latest analysis for OP Bancorp

OP Bancorp 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 $0.20 in 2018 to the most recent total annual payment of $0.48. This implies that the company grew its distributions at a yearly rate of about 13% 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 could be attracted to the stock based on the quality of its payment history. OP Bancorp has impressed us by growing EPS at 11% per year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for OP Bancorp's prospects of growing its dividend payments in the future.

OP Bancorp Looks Like A Great Dividend Stock

Overall, we like to see the dividend staying consistent, and we think OP Bancorp might even raise payments in the future. Earnings are easily covering distributions, and the company is generating plenty of cash. All of these factors considered, we think this has solid potential as a dividend stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Are management backing themselves to deliver performance? Check their shareholdings in OP Bancorp in our latest insider ownership analysis. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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