Fidelity D & D Bancorp's (NASDAQ:FDBC) Upcoming Dividend Will Be Larger Than Last Year's
Fidelity D & D Bancorp, Inc. (NASDAQ:FDBC) has announced that it will be increasing its periodic dividend on the 8th of December to $0.38, which will be 5.6% higher than last year's comparable payment amount of $0.36. Despite this raise, the dividend yield of 3.2% is only a modest boost to shareholder returns.
View our latest analysis for Fidelity D & D Bancorp
Fidelity D & D Bancorp's Earnings Will Easily Cover The Distributions
Even a low dividend yield can be attractive if it is sustained for years on end.
Having distributed dividends for at least 10 years, Fidelity D & D Bancorp has a long history of paying out a part of its earnings to shareholders. Based on Fidelity D & D Bancorp's last earnings report, the payout ratio is at a decent 29%, 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 12.7% over the next 12 months. If the dividend continues along recent trends, we estimate the future payout ratio will be 29%, which is in the range that makes us comfortable with the sustainability of the dividend.
Fidelity D & D Bancorp Has A Solid Track Record
The company has an extended history of paying stable dividends. The dividend has gone from an annual total of $0.667 in 2013 to the most recent total annual payment of $1.44. This means that it has been growing its distributions at 8.0% per annum over that time. The growth of the dividend has been pretty reliable, so we think this can offer investors some nice additional income in their portfolio.
The Dividend Looks Likely To Grow
Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. It's encouraging to see that Fidelity D & D Bancorp has been growing its earnings per share at 13% a year over the past five years. Fidelity D & D Bancorp definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.
We Really Like Fidelity D & D Bancorp's Dividend
In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. Earnings are easily covering distributions, and the company is generating plenty of cash. Taking this all into consideration, this looks like it could be a good dividend opportunity.
Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. See if management have their own wealth at stake, by checking insider shareholdings in Fidelity D & D Bancorp stock. 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.
