Northrim BanCorp, Inc. (NASDAQ:NRIM) has announced that it will be increasing its dividend from last year's comparable payment on the 14th of March to $0.64. This takes the annual payment to 3.0% of the current stock price, which is about average for the industry.

View our latest analysis for Northrim BanCorp

Northrim BanCorp'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.

Northrim BanCorp has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. Taking data from its last earnings report, calculating for the company's payout ratio shows 37%, which means that Northrim BanCorp would be able to pay its last dividend without pressure on the balance sheet.

The next 3 years are set to see EPS grow by 38.6%. The future payout ratio could be 30% over that time period, according to analyst estimates, which is a good look for the future of the dividend.

Northrim BanCorp Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. Since 2015, the dividend has gone from $0.68 total annually to $2.48. This implies that the company grew its distributions at a yearly rate of about 14% over that duration. It is good to see that there has been strong dividend growth, and that there haven't been any cuts for a long time.

The Dividend Looks Likely To Grow

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. We are encouraged to see that Northrim BanCorp has grown earnings per share at 17% per year over the past five years. Northrim BanCorp definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

Northrim BanCorp Looks Like A Great Dividend Stock

Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All of these factors considered, we think this has solid potential as a dividend stock.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. As an example, we've identified 1 warning sign for Northrim BanCorp that you should be aware of before investing. Is Northrim BanCorp 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.