The board of C&F Financial Corporation (NASDAQ:CFFI) has announced that it will pay a dividend of $0.44 per share on the 1st of April. Based on this payment, the dividend yield will be 3.3%, which is fairly typical for the industry.

See our latest analysis for C&F Financial

C&F Financial's Dividend Forecasted To Be Well Covered By Earnings

We like a dividend to be consistent over the long term, so checking whether it is sustainable is important.

C&F Financial has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. Based on C&F Financial's last earnings report, the payout ratio is at a decent 25%, meaning that the company is able to pay out its dividend with a bit of room to spare.

If the trend of the last few years continues, EPS will grow by 6.5% over the next 12 months. If the dividend continues on this path, the future payout ratio could be 24% by next year, which we think can be pretty sustainable going forward.

C&F Financial Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2014, the dividend has gone from $1.16 total annually to $1.76. This works out to be a compound annual growth rate (CAGR) of approximately 4.3% a year over that time. Dividends have grown relatively slowly, which is not great, but some investors may value the relative consistency of the dividend.

The Dividend Has Growth Potential

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. C&F Financial has seen EPS rising for the last five years, at 6.5% per annum. With a decent amount of growth and a low payout ratio, we think this bodes well for C&F Financial's prospects of growing its dividend payments in the future.

C&F Financial Looks Like A Great Dividend Stock

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. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All in all, this checks a lot of the boxes we look for when choosing an income stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. However, there are other things to consider for investors when analysing stock performance. Now, if you want to look closer, it would be worth checking out our free research on C&F Financial 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.