Bank of the James Financial Group, Inc. (NASDAQ:BOTJ) has announced that it will pay a dividend of $0.08 per share on the 15th of September. This means the annual payment will be 2.9% of the current stock price, which is lower than the industry average.

View our latest analysis for Bank of the James Financial Group

Bank of the James Financial Group's Dividend Forecasted To Be Well Covered By Earnings

It would be nice for the yield to be higher, but we should also check if higher levels of dividend payment would be sustainable.

Having paid out dividends for 9 years, Bank of the James Financial Group has a good history of paying out a part of its earnings to shareholders. While past data isn't a guarantee for the future, Bank of the James Financial Group's latest earnings report puts its payout ratio at 16%, showing that the company can pay out its dividends comfortably.

Looking forward, earnings per share could rise by 20.4% over the next year if the trend from the last few years continues. 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.

Bank of the James Financial Group Doesn't Have A Long Payment History

Bank of the James Financial Group's dividend has been pretty stable for a little while now, but we will continue to be cautious until it has been demonstrated for a few more years. Since 2014, the dividend has gone from $0.182 total annually to $0.32. This implies that the company grew its distributions at a yearly rate of about 6.5% over that duration. The dividend has been growing as a reasonable rate, which we like. However, investors will probably want to see a longer track record before they consider Bank of the James Financial Group to be a consistent dividend paying stock.

The Dividend Looks Likely To Grow

Investors could be attracted to the stock based on the quality of its payment history. Bank of the James Financial Group has seen EPS rising for the last five years, at 20% per annum. Earnings have been growing rapidly, and with a low payout ratio we think that the company could turn out to be a great dividend stock.

Bank of the James Financial Group Looks Like A Great Dividend Stock

Overall, we like to see the dividend staying consistent, and we think Bank of the James Financial Group might even raise payments in the future. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. All of these factors considered, we think this has solid potential as a dividend stock.