1st Source Corp's Dividend Analysis
Assessing the Sustainability and Growth of SRCE's Dividends
1st Source Corp (NASDAQ:SRCE) recently announced a dividend of $0.34 per share, payable on 2024-02-15, with the ex-dividend date set for 2024-02-02. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into 1st Source Corp's dividend performance and assess its sustainability.
What Does 1st Source Corp Do?
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1st Source Corp, along with its subsidiary, offers banking services. The bank provides Commercial, Agricultural, and Real Estate Loans which are given to privately owned business clients mainly located within the regional market area. Consumer Services that consist of a full range of consumer banking products and services, Trust, and Wealth Advisory Services which includes a wide range of trust, investment, agency, and custodial services for individual, corporate, and not-for-profit clients, and Specialty Finance Group Services that provide a broad range of comprehensive equipment loan and lease products addressing the financing needs of a broad array of companies.
A Glimpse at 1st Source Corp's Dividend History
1st Source Corp has maintained a consistent dividend payment record since 1985, with dividends currently distributed on a quarterly basis. The stock is listed as a dividend aristocrat, a prestigious recognition given to companies that have increased their dividend each year for at least the past 39 years. Below is a chart showing annual Dividends Per Share to track historical trends.
Breaking Down 1st Source Corp's Dividend Yield and Growth
As of today, 1st Source Corp currently boasts a 12-month trailing dividend yield of 2.51% and a 12-month forward dividend yield of 2.61%, indicating an expectation of increased dividend payments over the next 12 months. Over the past three years, the annual dividend growth rate was 4.60%, which extends to 9.70% per year over a five-year horizon, and stands at 8.90% over the past decade.
Based on 1st Source Corp's dividend yield and five-year growth rate, the 5-year yield on cost of 1st Source Corp stock as of today is approximately 3.99%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, ensuring funds are available for future growth and downturns. As of 2023-12-31, 1st Source Corp's dividend payout ratio is 0.26.
1st Source Corp's profitability rank of 6 out of 10 as of 2023-12-31 suggests fair profitability. The company has reported positive net income for each year over the past decade, further solidifying its high profitability.
Growth Metrics: The Future Outlook
Robust growth metrics are essential for the sustainability of dividends. 1st Source Corp's growth rank of 6 out of 10 suggests a fair growth outlook. The company's revenue per share and 3-year revenue growth rate indicate a strong revenue model, with an average annual increase of 4.20%, although this underperforms approximately 63.86% of global competitors.
The 3-year EPS growth rate shows the company's capability to grow earnings by approximately 10.70% per year on average, which underperforms approximately 43.55% of global competitors. The 5-year EBITDA growth rate of 12.70% also underperforms about 34.75% of global competitors.
Next Steps
In conclusion, 1st Source Corp's consistent dividend payments, steady dividend growth rate, manageable payout ratio, and fair profitability and growth metrics paint a picture of a company that is committed to rewarding its shareholders while maintaining a balance with its growth and investment needs. While some growth metrics show underperformance compared to global competitors, the company's overall financial health suggests that its dividend policy is sustainable in the foreseeable future. Investors considering adding a steady income-generating stock to their portfolio might find 1st Source Corp an attractive option. However, as with any investment, it's essential to conduct thorough research and consider the broader economic and industry trends.
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This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
This article first appeared on GuruFocus.
