The board of Ohio Valley Banc Corp. (NASDAQ:OVBC) has announced that it will pay a dividend on the 10th of February, with investors receiving $0.22 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.

Check out our latest analysis for Ohio Valley Banc

Ohio Valley Banc's Dividend Forecasted To Be Well Covered By Earnings

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

Having distributed dividends for at least 10 years, Ohio Valley Banc has a long history of paying out a part of its earnings to shareholders. Taking data from its last earnings report, calculating for the company's payout ratio shows 36%, which means that Ohio Valley Banc would be able to pay its last dividend without pressure on the balance sheet.

If the trend of the last few years continues, EPS will grow by 2.9% over the next 12 months. If the dividend continues on this path, the future payout ratio could be 35% by next year, which we think can be pretty sustainable going forward.

Ohio Valley Banc Has A Solid Track Record

The company has an extended history of paying stable dividends. The dividend has gone from an annual total of $0.84 in 2015 to the most recent total annual payment of $0.88. Dividend payments have grown at less than 1% a year over this period. Slow and steady dividend growth might not sound that exciting, but dividends have been stable for ten years, which we think makes this a fairly attractive offer.

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. Earnings have grown at around 2.9% a year for the past five years, which isn't massive but still better than seeing them shrink. While growth may be thin on the ground, Ohio Valley Banc could always pay out a higher proportion of earnings to increase shareholder returns.

We Really Like Ohio Valley Banc's Dividend

In summary, it is good to see that the dividend is staying consistent, and we don't think there is any reason to suspect this might change over the medium term. 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.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Now, if you want to look closer, it would be worth checking out our free research on Ohio Valley Banc management tenure, salary, and performance. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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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.