First Business Financial Services' (NASDAQ:FBIZ) Shareholders Will Receive A Bigger Dividend Than Last Year
The board of First Business Financial Services, Inc. (NASDAQ:FBIZ) has announced that it will be increasing its dividend by 9.9% on the 21st of February to $0.25, up from last year's comparable payment of $0.228. Although the dividend is now higher, the yield is only 2.5%, which is below the industry average.
See our latest analysis for First Business Financial Services
First Business Financial Services' Payment Expected To Have Solid Earnings Coverage
The dividend yield is a little bit low, but sustainability of the payments is also an important part of evaluating an income stock.
Having distributed dividends for at least 10 years, First Business Financial Services has a long history of paying out a part of its earnings to shareholders. While past data isn't a guarantee for the future, First Business Financial Services' latest earnings report puts its payout ratio at 20%, showing that the company can pay out its dividends comfortably.
Over the next 3 years, EPS is forecast to expand by 26.6%. The future payout ratio could be 17% over that time period, according to analyst estimates, which is a good look for the future of the dividend.
First Business Financial Services Has A Solid Track Record
The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. Since 2014, the dividend has gone from $0.28 total annually to $0.91. This means that it has been growing its distributions at 13% per annum over that time. We can see that payments have shown some very nice upward momentum without faltering, which provides some reassurance that future payments will also be reliable.
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 Business Financial Services has seen EPS rising for the last five years, at 19% per annum. First Business Financial Services definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.
First Business Financial Services Looks Like A Great Dividend Stock
Overall, a dividend increase is always good, and we think that First Business Financial Services 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 of these factors considered, we think this has solid potential as a dividend stock.
Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Companies that are growing earnings tend to be the best dividend stocks over the long term. See what the 4 analysts we track are forecasting for First Business Financial Services for free with public analyst estimates for the company. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.
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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.
