Colony Bankcorp (NASDAQ:CBAN) Is Paying Out A Dividend Of $0.11

The board of Colony Bankcorp, Inc. (NASDAQ:CBAN) has announced that it will pay a dividend of $0.11 per share on the 24th of May. The dividend yield will be 4.6% based on this payment which is still above the industry average.

See our latest analysis for Colony Bankcorp

Colony Bankcorp's Dividend Forecasted To Be Well Covered By Earnings

A big dividend yield for a few years doesn't mean much if it can't be sustained.

Colony Bankcorp has established itself as a dividend paying company, given its 6-year history of distributing earnings to shareholders. Past distributions do not necessarily guarantee future ones, but Colony Bankcorp's payout ratio of 40% is a good sign for current shareholders as this means that earnings decently cover dividends.

Looking forward, earnings per share is forecast to rise by 11.6% over the next year. If the dividend continues along recent trends, we estimate the future payout ratio will be 45%, which is in the range that makes us comfortable with the sustainability of the dividend.

Colony Bankcorp Doesn't Have A Long Payment History

The dividend's track record has been pretty solid, but with only 6 years of history we want to see a few more years of history before making any solid conclusions. The annual payment during the last 6 years was $0.10 in 2017, and the most recent fiscal year payment was $0.44. This implies that the company grew its distributions at a yearly rate of about 28% over that duration. Colony Bankcorp has been growing its dividend quite rapidly, which is exciting. However, the short payment history makes us question whether this performance will persist across a full market cycle.

The Dividend's Growth Prospects Are Limited

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Unfortunately, Colony Bankcorp's earnings per share has been essentially flat over the past five years, which means the dividend may not be increased each year. While growth may be thin on the ground, Colony Bankcorp could always pay out a higher proportion of earnings to increase shareholder returns.

Our Thoughts On Colony Bankcorp's Dividend

Overall, a consistent dividend is a good thing, and we think that Colony Bankcorp has the ability to continue this into the future. The dividend has been at reasonable levels historically, but that hasn't translated into a consistent payment. This looks like it could be a good dividend stock going forward, but we would note that the payout ratio has been at higher levels in the past so it could happen again.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. As an example, we've identified 1 warning sign for Colony Bankcorp that you should be aware of before investing. Is Colony Bankcorp 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.

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