Is First Busey Corporation (NASDAQ:BUSE) A Good Pick For Income Investors?
A large part of investment returns can be generated by dividend-paying stock given their role in compounding returns over time. In the past 10 years First Busey Corporation (NASDAQ:BUSE) has returned an average of 4.00% per year to investors in the form of dividend payouts. Should it have a place in your portfolio? Let’s take a look at First Busey in more detail. Check out our latest analysis for First Busey
5 questions I ask before picking a dividend stock
Whenever I am looking at a potential dividend stock investment, I always check these five metrics:
Does it pay an annual yield higher than 75% of dividend payers?
Has it paid dividend every year without dramatically reducing payout in the past?
Has it increased its dividend per share amount over the past?
Does earnings amply cover its dividend payments?
Based on future earnings growth, will it be able to continue to payout dividend at the current rate?
How well does First Busey fit our criteria?
The current trailing twelve-month payout ratio for the stock is 48.30%, which means that the dividend is covered by earnings. In the near future, analysts are predicting lower payout ratio of 33.82%, leading to a dividend yield of around 2.49%. However, EPS should increase to $2.25, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment. If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. Not only have dividend payouts from First Busey fallen over the past 10 years, it has also been highly volatile during this time, with drops of over 25% in some years. This means that dividend hunters should probably steer clear of the stock, at least for now until the track record improves. Relative to peers, First Busey has a yield of 2.32%, which is on the low-side for Banks stocks.
Next Steps:
Taking all the above into account, First Busey is a complicated pick for dividend investors given that there are a couple of positive things about it as well as negative. But if you are not exclusively a dividend investor, the stock could still be an interesting investment opportunity. Given that this is purely a dividend analysis, I recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. There are three pertinent aspects you should further examine:
1. Future Outlook: What are well-informed industry analysts predicting for BUSE’s future growth? Take a look at our free research report of analyst consensus for BUSE’s outlook.
2. Valuation: What is BUSE 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 BUSE is currently mispriced by the market.
3. Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
