First Capital (NASDAQ:FCAP) Will Pay A Dividend Of $0.26
The board of First Capital, Inc. (NASDAQ:FCAP) has announced that it will pay a dividend of $0.26 per share on the 30th of September. Based on this payment, the dividend yield will be 3.8%, which is fairly typical for the industry.
View our latest analysis for First Capital
First Capital's Earnings Will Easily Cover The Distributions
We like a dividend to be consistent over the long term, so checking whether it is sustainable is important.
Having distributed dividends for at least 10 years, First Capital has a long history of paying out a part of its earnings to shareholders. Past distributions do not necessarily guarantee future ones, but First Capital's payout ratio of 32% is a good sign as this means that earnings decently cover dividends.
Looking forward, earnings per share could rise by 8.4% over the next year if the trend from the last few years continues. If the dividend continues on this path, the future payout ratio could be 30% by next year, which we think can be pretty sustainable going forward.
First Capital Has A Solid Track Record
The company has a sustained record of paying dividends with very little fluctuation. Since 2012, the annual payment back then was $0.76, compared to the most recent full-year payment of $1.04. This implies that the company grew its distributions at a yearly rate of about 3.2% over that duration. While the consistency in the dividend payments is impressive, we think the relatively slow rate of growth is less attractive.
The Dividend Has Growth Potential
Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. First Capital has impressed us by growing EPS at 8.4% 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 Capital Looks Like A Great Dividend Stock
Overall, we like to see the dividend staying consistent, and we think First Capital might even raise payments in the future. Distributions are quite easily covered by earnings, which are also being converted to cash flows. Taking this all into consideration, this looks like it could be a good dividend opportunity.
It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. As an example, we've identified 1 warning sign for First Capital that you should be aware of before investing. Is First Capital 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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