Bank First's (NASDAQ:BFC) Dividend Will Be Increased To $0.35
Bank First Corporation (NASDAQ:BFC) has announced that it will be increasing its dividend from last year's comparable payment on the 10th of April to $0.35. This takes the annual payment to 1.6% of the current stock price, which unfortunately is below what the industry is paying.
Check out our latest analysis for Bank First
Bank First's Payment Expected To Have Solid Earnings Coverage
If it is predictable over a long period, even low dividend yields can be attractive.
Bank First has a long history of paying out dividends, with its current track record at a minimum of 10 years. Using data from its latest earnings report, Bank First's payout ratio sits at 16%, an extremely comfortable number that shows that it can pay its dividend.
EPS is set to fall by 27.9% over the next 3 years. However, as estimated by analysts, the future payout ratio could be 25% over the same time period, which we think the company can easily maintain.
Dividend Volatility
While the company has been paying a dividend for a long time, it has cut the dividend at least once in the last 10 years. The annual payment during the last 10 years was $0.44 in 2014, and the most recent fiscal year payment was $1.40. This means that it has been growing its distributions at 12% per annum over that time. Bank First has grown distributions at a rapid rate despite cutting the dividend at least once in the past. Companies that cut once often cut again, so we would be cautious about buying this stock solely for the dividend income.
The Dividend Looks Likely To Grow
With a relatively unstable dividend, it's even more important to evaluate if earnings per share is growing, which could point to a growing dividend in the future. Bank First has impressed us by growing EPS at 14% per year over the past five years. Bank First definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.
We should note that Bank First has issued stock equal to 15% of shares outstanding. Regularly doing this can be detrimental - it's hard to grow dividends per share when new shares are regularly being created.
Bank First Looks Like A Great Dividend Stock
Overall, a dividend increase is always good, and we think that Bank First is a strong income stock thanks to its track record and growing earnings. The distributions are easily covered by earnings, and there is plenty of cash being generated as well. If earnings do fall over the next 12 months, the dividend could be buffeted a little bit, but we don't think it should cause too much of a problem in the long term. All in all, this checks a lot of the boxes we look for when choosing an income stock.
Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Case in point: We've spotted 3 warning signs for Bank First (of which 1 doesn't sit too well with us!) you should know about. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.
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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.
