3 Days Left Before First Midwest Bancorp, Inc. (NASDAQ:FMBI) Will Be Trading Ex-Dividend
Important news for shareholders and potential investors in First Midwest Bancorp, Inc. (NASDAQ:FMBI): The dividend payment of US$0.12 per share will be distributed to shareholders on 09 April 2019, and the stock will begin trading ex-dividend at an earlier date, 21 March 2019. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I examine First Midwest Bancorp’s latest financial data to analyse its dividend characteristics.
View our latest analysis for First Midwest Bancorp
Here’s how I find good dividend stocks
When researching a dividend stock, I always follow the following screening criteria:
Is its annual yield among the top 25% of dividend-paying companies?
Has it consistently paid a stable dividend without missing a payment or drastically cutting payout?
Has it increased its dividend per share amount over the past?
Is its earnings sufficient to payout dividend at the current rate?
Will it have the ability to keep paying its dividends going forward?
How well does First Midwest Bancorp fit our criteria?
The company currently pays out 30% of its earnings as a dividend, according to its trailing twelve-month data, meaning the dividend is sufficiently covered by earnings. However, going forward, analysts expect FMBI’s payout to fall to 26% of its earnings. Assuming a constant share price, this equates to a dividend yield of 2.4%. However, EPS should increase to $1.91, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment.
If you want to dive deeper into the sustainability of a certain payout ratio, you may wish to consider the cash flow of the business. A company with strong cash flow, relative to earnings, can sometimes sustain a high pay out ratio.
If dividend is a key criteria in your investment consideration, then you need to make sure the dividend stock you’re eyeing out is reliable in its payments. In the case of FMBI it has increased its DPS from $0.040 to $0.48 in the past 10 years. During this period it has not missed a payment, as one would expect for a company increasing its dividend. This is an impressive feat, which makes FMBI a true dividend rockstar.
Compared to its peers, First Midwest Bancorp has a yield of 2.2%, which is on the low-side for Banks stocks.
Next Steps:
Taking into account the dividend metrics, First Midwest Bancorp ticks most of the boxes as a strong dividend investment, putting it in my list of top dividend payers. Given that this is purely a dividend analysis, you should always research extensively before deciding whether or not a stock is an appropriate investment for you. I always recommend analysing the company’s fundamentals and underlying business before making an investment decision. Below, I’ve compiled three relevant factors you should further research:
Future Outlook: What are well-informed industry analysts predicting for FMBI’s future growth? Take a look at our free research report of analyst consensus for FMBI’s outlook.
Valuation: What is FMBI worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether FMBI is currently mispriced by the market.
Other Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.
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.
