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First Guaranty Bancshares, Inc.'s (NASDAQ:FGBI) Could Be A Buy For Its Upcoming Dividend

Simply Wall St

First Guaranty Bancshares, Inc. (NASDAQ:FGBI) stock is about to trade ex-dividend in 3 days time. You will need to purchase shares before the 20th of March to receive the dividend, which will be paid on the 31st of March.

First Guaranty Bancshares's next dividend payment will be US$0.16 per share. Last year, in total, the company distributed US$0.64 to shareholders. Looking at the last 12 months of distributions, First Guaranty Bancshares has a trailing yield of approximately 4.3% on its current stock price of $14.78. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

Check out our latest analysis for First Guaranty Bancshares

Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. First Guaranty Bancshares paid out a comfortable 41% of its profit last year.

When a company paid out less in dividends than it earned in profit, this generally suggests its dividend is affordable. The lower the % of its profit that it pays out, the greater the margin of safety for the dividend if the business enters a downturn.

Click here to see how much of its profit First Guaranty Bancshares paid out over the last 12 months.

NasdaqGM:FGBI Historical Dividend Yield, March 16th 2020
NasdaqGM:FGBI Historical Dividend Yield, March 16th 2020

Have Earnings And Dividends Been Growing?

Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. This is why it's a relief to see First Guaranty Bancshares earnings per share are up 2.6% per annum over the last five years.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. First Guaranty Bancshares has delivered 3.9% dividend growth per year on average over the past ten years. It's encouraging to see the company lifting dividends while earnings are growing, suggesting at least some corporate interest in rewarding shareholders.

To Sum It Up

Is First Guaranty Bancshares an attractive dividend stock, or better left on the shelf? It has been growing its earnings per share somewhat in recent years, although it reinvests more than half its earnings in the business, which could suggest there are some growth projects that have not yet reached fruition. In summary, First Guaranty Bancshares appears to have some promise as a dividend stock, and we'd suggest taking a closer look at it.

Want to learn more about First Guaranty Bancshares's dividend performance? Check out this visualisation of its historical revenue and earnings growth.

We wouldn't recommend just buying the first dividend stock you see, though. Here's a list of interesting dividend stocks with a greater than 2% yield and an upcoming dividend.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.