1st Source Corporation (NASDAQ:SRCE) Looks Like A Good Stock, And It's Going Ex-Dividend Soon
1st Source Corporation (NASDAQ:SRCE) is about to trade ex-dividend in the next 3 days. You will need to purchase shares before the 2nd of August to receive the dividend, which will be paid on the 15th of August.
1st Source's next dividend payment will be US$0.27 per share. Last year, in total, the company distributed US$1.08 to shareholders. Calculating the last year's worth of payments shows that 1st Source has a trailing yield of 2.3% on the current share price of $47.07. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. So we need to investigate whether 1st Source can afford its dividend, and if the dividend could grow.
Check out our latest analysis for 1st Source
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. 1st Source has a low and conservative payout ratio of just 16% of its income after tax.
When a company paid out less in dividends than it earned in profit, this generally suggests its dividend is affordable. The lower the % of its profit that it pays out, the greater the margin of safety for the dividend if the business enters a downturn.
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. Fortunately for readers, 1st Source's earnings per share have been growing at 11% a year for the past five years.
Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Since the start of our data, 10 years ago, 1st Source has lifted its dividend by approximately 6.4% a year on average. We're glad to see dividends rising alongside earnings over a number of years, which may be a sign the company intends to share the growth with shareholders.
The Bottom Line
Should investors buy 1st Source for the upcoming dividend? Companies like 1st Source that are growing rapidly and paying out a low fraction of earnings, are usually reinvesting heavily in their business. Perhaps even more importantly - this can sometimes signal management is focused on the long term future of the business. In summary, 1st Source appears to have some promise as a dividend stock, and we'd suggest taking a closer look at it.
Wondering what the future holds for 1st Source? See what the three analysts we track are forecasting, with this visualisation of its historical and future estimated earnings and cash flow
If you're in the market for dividend stocks, we recommend checking our list of top dividend stocks with a greater than 2% yield and an upcoming dividend.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
