First Guaranty Bancshares (NASDAQ:FGBI) Has Announced A Dividend Of $0.16
First Guaranty Bancshares, Inc. (NASDAQ:FGBI) has announced that it will pay a dividend of $0.16 per share on the 29th of December. This means the annual payment is 6.3% of the current stock price, which is above the average for the industry.
See our latest analysis for First Guaranty Bancshares
First Guaranty Bancshares' Earnings Will Easily Cover The Distributions
If the payments aren't sustainable, a high yield for a few years won't matter that much.
First Guaranty Bancshares has a long history of paying out dividends, with its current track record at a minimum of 10 years. Taking data from its last earnings report, calculating for the company's payout ratio shows 65%, which means that First Guaranty Bancshares would be able to pay its last dividend without pressure on the balance sheet.
Over the next 3 years, EPS is forecast to fall by 16.0%. Fortunately, the future payout ratio could reach 92% in the same 3 years as estimated by analysts, which is on the higher side, but certainly still feasible.
First Guaranty Bancshares Has A Solid Track Record
The company has an extended history of paying stable dividends. The annual payment during the last 10 years was $0.437 in 2013, and the most recent fiscal year payment was $0.64. This implies that the company grew its distributions at a yearly rate of about 3.9% over that duration. While the consistency in the dividend payments is impressive, we think the relatively slow rate of growth is less attractive.
Dividend Growth Is Doubtful
The company's investors will be pleased to have been receiving dividend income for some time. However, things aren't all that rosy. First Guaranty Bancshares has seen earnings per share falling at 6.7% per year over the last five years. If earnings continue declining, the company may have to make the difficult choice of reducing the dividend or even stopping it completely - the opposite of dividend growth.
In Summary
Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. While First Guaranty Bancshares is earning enough to cover the dividend, we are generally unimpressed with its future prospects. Overall, we don't think this company has the makings of a good 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. To that end, First Guaranty Bancshares has 4 warning signs (and 1 which doesn't sit too well with us) we think you should know about. Is First Guaranty Bancshares 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.
