First United (NASDAQ:FUNC) Has Affirmed Its Dividend Of $0.20
First United Corporation's (NASDAQ:FUNC) investors are due to receive a payment of $0.20 per share on 1st of May. This means that the annual payment will be 3.5% of the current stock price, which is in line with the average for the industry.
View our latest analysis for First United
First United's Earnings Will Easily Cover The Distributions
We aren't too impressed by dividend yields unless they can be sustained over time.
Having paid out dividends for 6 years, First United has a good history of paying out a part of its earnings to shareholders. Based on First United's last earnings report, the payout ratio is at a decent 35%, meaning that the company is able to pay out its dividend with a bit of room to spare.
Over the next 3 years, EPS is forecast to expand by 61.9%. The future payout ratio could be 25% over that time period, according to analyst estimates, which is a good look for the future of the dividend.
First United Is Still Building Its Track Record
It is great to see that First United has been paying a stable dividend for a number of years now, however we want to be a bit cautious about whether this will remain true through a full economic cycle. Since 2018, the dividend has gone from $0.36 total annually to $0.80. This means that it has been growing its distributions at 14% per annum over that time. The dividend has been growing rapidly, however with such a short payment history we can't know for sure if payment can continue to grow over the long term, so caution may be warranted.
First United Could Grow Its Dividend
Investors could be attracted to the stock based on the quality of its payment history. It's encouraging to see that First United has been growing its earnings per share at 8.5% a 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 United Looks Like A Great Dividend Stock
In summary, it is good to see that the dividend is staying consistent, and we don't think there is any reason to suspect this might change over the medium term. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All of these factors considered, we think this has solid potential as a dividend stock.
Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. As an example, we've identified 2 warning signs for First United that you should be aware of before investing. 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.
