First Guaranty Bancshares (NASDAQ:FGBI) Has Affirmed Its Dividend Of $0.16
First Guaranty Bancshares, Inc.'s (NASDAQ:FGBI) investors are due to receive a payment of $0.16 per share on 29th of September. This means the annual payment is 5.7% of the current stock price, which is above the average for the industry.
View our latest analysis for First Guaranty Bancshares
First Guaranty Bancshares' Payment Expected To Have Solid Earnings Coverage
While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable.
First Guaranty Bancshares has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. Based on First Guaranty Bancshares' last earnings report, the payout ratio is at a decent 41%, meaning that the company is able to pay out its dividend with a bit of room to spare.
Looking forward, earnings per share is forecast to fall by 44.3% over the next year. Assuming the dividend continues along recent trends, we think the future payout ratio could reach 81%, which is definitely on the higher side.
First Guaranty Bancshares 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 2013, the dividend has gone from $0.437 total annually to $0.64. This means that it has been growing its distributions at 3.9% per annum over that time. Slow and steady dividend growth might not sound that exciting, but dividends have been stable for ten years, which we think makes this a fairly attractive offer.
Dividend Growth May Be Hard To Achieve
The company's investors will be pleased to have been receiving dividend income for some time. Earnings has been rising at 2.9% per annum over the last five years, which admittedly is a bit slow. First Guaranty Bancshares is struggling to find viable investments, so it is returning more to shareholders. This isn't bad in itself, but unless earnings growth pick up we wouldn't expect dividends to grow either.
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. We don't think First Guaranty Bancshares is a great stock to add to your portfolio if income is your focus.
Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For example, we've identified 3 warning signs for First Guaranty Bancshares (1 makes us a bit uncomfortable!) that you should be aware of before investing. 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.
