First Bancorp's (NASDAQ:FNLC) Shareholders Will Receive A Bigger Dividend Than Last Year
The First Bancorp, Inc. (NASDAQ:FNLC) has announced that it will be increasing its periodic dividend on the 20th of July to $0.35, which will be 2.9% higher than last year's comparable payment amount of $0.34. This will take the annual payment to 5.5% of the stock price, which is above what most companies in the industry pay.
View our latest analysis for First Bancorp
First Bancorp's Payment Expected To Have Solid Earnings Coverage
While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable.
First Bancorp has a long history of paying out dividends, with its current track record at a minimum of 10 years. Past distributions do not necessarily guarantee future ones, but First Bancorp's payout ratio of 40% is a good sign as this means that earnings decently cover dividends.
Looking forward, earnings per share could rise by 12.1% over the next year if the trend from the last few years continues. Assuming the dividend continues along recent trends, we think the future payout ratio could be 39% by next year, which is in a pretty sustainable range.
First Bancorp Has A Solid Track Record
Even over a long history of paying dividends, the company's distributions have been remarkably stable. The dividend has gone from an annual total of $0.78 in 2013 to the most recent total annual payment of $1.36. This means that it has been growing its distributions at 5.7% per annum over that time. Companies like this can be very valuable over the long term, if the decent rate of growth can be maintained.
The Dividend Looks Likely To Grow
Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. First Bancorp has impressed us by growing EPS at 12% per year over the past five years. A low payout ratio and decent growth suggests that the company is reinvesting well, and it also has plenty of room to increase the dividend over time.
First Bancorp Looks Like A Great Dividend Stock
Overall, a dividend increase is always good, and we think that First Bancorp is a strong income stock thanks to its track record and growing earnings. Earnings are easily covering distributions, and the company is generating plenty of cash. All in all, this checks a lot of the boxes we look for when choosing an income stock.
It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Are management backing themselves to deliver performance? Check their shareholdings in First Bancorp in our latest insider ownership analysis. Is First Bancorp not quite the opportunity you were looking for? Why not check out our selection of top 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.
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