RBB Bancorp's (NASDAQ:RBB) investors are due to receive a payment of $0.16 per share on 13th of February. Based on this payment, the dividend yield will be 3.1%, which is fairly typical for the industry.

RBB Bancorp's Earnings Will Easily Cover The Distributions

We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue.

RBB Bancorp has established itself as a dividend paying company, given its 8-year history of distributing earnings to shareholders. Based on RBB Bancorp's last earnings report, the payout ratio is at a decent 35%, meaning that the company is able to pay out its dividend with a bit of room to spare.

Looking forward, EPS is forecast to rise by 40.9% over the next 3 years. The future payout ratio could be 29% over that time period, according to analyst estimates, which is a good look for the future of the dividend.

RBB Bancorp's Dividend Has Lacked Consistency

RBB Bancorp has been paying dividends for a while, but the track record isn't stellar. This makes us cautious about the consistency of the dividend over a full economic cycle. Since 2018, the dividend has gone from $0.32 total annually to $0.64. This means that it has been growing its distributions at 9.1% per annum over that time. It's good to see the dividend growing at a decent rate, but the dividend has been cut at least once in the past. RBB Bancorp might have put its house in order since then, but we remain cautious.

The Dividend's Growth Prospects Are Limited

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. However, RBB Bancorp has only grown its earnings per share at 2.4% per annum over the past five years. While EPS growth is quite low, RBB Bancorp has the option to increase the payout ratio to return more cash to shareholders.

Our Thoughts On RBB Bancorp's Dividend

Overall, we think RBB Bancorp is a solid choice as a dividend stock, even though the dividend wasn't raised this year. The payout ratio looks good, but unfortunately the company's dividend track record isn't stellar. The dividend looks okay, but there have been some issues in the past, so we would be a little bit cautious.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Is RBB Bancorp not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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.