First Bancorp (FBNC) Declares 11% Dividend Hike: Worth a Look?
First Bancorp’s FBNC board of directors recently approved a 11.1% hike in the company’s quarterly common stock dividend. The revised quarterly dividend now totals 20 cents per share compared with the previous figure of 18 cents. The amount will be paid out on Apr 25 to shareholders on record as of Mar 31, 2021.
Considering last day’s closing price of $46.45 per share, the dividend yield is currently valued at 1.7%.
Since 2017, First Bancorp has been increasing its dividend annually, with 2020 being an exception on account of the pandemic. Prior to the current hike, the company had raised the dividend twice in 2019. This reflects the bank’s commitment to return value to shareholders with its robust cash-generation competencies.
Apart from this, the company has a share repurchase plan in place, announced in November 2019. On Dec 31, 2020, the board of directors authorized a continuation of its share repurchase program with a maximum repurchase amount of $20 million and an expiration date of Dec 31, 2021.
While First Bancorp looks promising based on regular rise in dividend and share buybacks, one must take a look at its fundamentals and financial performance before taking any investment decision.
Earnings Strength: Over the past three-five years, the bank’s earnings grew at a rate of 22.4%. This momentum is likely to continue as the company’s earnings are projected to be up 16.3% for 2021.
Solid Balance Sheet: As of Dec 31, 2020, it had total borrowings of $61.8 million, while its cash and cash equivalents were $367.3 million. Therefore, the company’s earnings stability and strong cash position indicate a lesser likelihood of default of interest and debt repayments if the economic situation worsens.
Low Leverage: First Bancorp’s debt/equity ratio is 0.07 compared with the industry average of 0.21, reflecting a considerably lower debt burden. It highlights the company’s financial soundness even in varied economic cycles.
Positive Estimates Revisions: The Zacks Consensus Estimate for earnings has been revised 4.2% upward for 2021 and 2022, over the past 30 days. At present, First Bancorp carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Notably, the stock’s shares have surged 120.7% in the past six months compared with 89.9% growth of the industry it belongs to.
Other Finance Stocks Taking Similar Actions
In the current year, several finance stocks have announced dividend hikes. Some of these companies are Merchants Bancorp MBIN, MVB Financial MVBF and Cohen & Steers CNS. Merchants Bancorp announced a quarterly cash dividend of 9 cents per share, representing an increase of 12.5% from the prior payout. MVB Financial’s board of directors recently approved a 11.1% hike in the company’s quarterly common stock dividend and Cohen & Steers announced a 15.4% increase in its cash dividend to 45 cents per share.
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