Virginia National Bankshares Corporation (NASDAQ:VABK) has announced that it will pay a dividend of $0.33 per share on the 28th of March. Based on this payment, the dividend yield will be 3.6%, which is fairly typical for the industry.

View our latest analysis for Virginia National Bankshares

Virginia National Bankshares' Dividend Forecasted To Be Well Covered By Earnings

Unless the payments are sustainable, the dividend yield doesn't mean too much.

Virginia National Bankshares has a long history of paying out dividends, with its current track record at a minimum of 10 years. Past distributions do not necessarily guarantee future ones, but Virginia National Bankshares' payout ratio of 42% is a good sign as this means that earnings decently cover dividends.

Looking forward, earnings per share could rise by 4.9% over the next year if the trend from the last few years continues. 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.

Virginia National Bankshares Has A Solid Track Record

The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. Since 2015, the dividend has gone from $0.181 total annually to $1.32. This implies that the company grew its distributions at a yearly rate of about 22% over that duration. Rapidly growing dividends for a long time is a very valuable feature for an income stock.

Dividend Growth May Be Hard To Achieve

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 4.9% a year for the past five years, which isn't massive but still better than seeing them shrink. The company has been growing at a pretty soft 4.9% per annum, and is paying out quite a lot of its earnings to shareholders. This isn't bad in itself, but unless earnings growth pick up we wouldn't expect dividends to grow either.

Virginia National Bankshares Looks Like A Great Dividend Stock

Overall, we like to see the dividend staying consistent, and we think Virginia National Bankshares might even raise payments in the future. 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.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Are management backing themselves to deliver performance? Check their shareholdings in Virginia National Bankshares in our latest insider ownership analysis. 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.