First United (NASDAQ:FUNC) Will Pay A Dividend Of $0.20
First United Corporation (NASDAQ:FUNC) will pay a dividend of $0.20 on the 1st of May. This payment means that the dividend yield will be 3.6%, which is around the industry average.
View our latest analysis for First United
First United's Dividend Forecasted To Be Well Covered By Earnings
We like a dividend to be consistent over the long term, so checking whether it is sustainable is important.
Having paid out dividends for 6 years, First United has a good history of paying out a part of its earnings to shareholders. Past distributions do not necessarily guarantee future ones, but First United's payout ratio of 35% is a good sign for current shareholders as this means that earnings decently cover dividends.
Over the next 3 years, EPS is forecast to expand by 62.1%. 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 Doesn't Have A Long Payment History
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. The dividend has gone from an annual total of $0.36 in 2018 to the most recent total annual payment of $0.80. This implies that the company grew its distributions at a yearly rate of about 14% over that duration. We're not overly excited about the relatively short history of dividend payments, however the dividend is growing at a nice rate and we might take a closer look.
We Could See First United's Dividend Growing
The company's investors will be pleased to have been receiving dividend income for some time. First United has seen EPS rising for the last five years, at 8.5% per annum. 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
Overall, we like to see the dividend staying consistent, and we think First United might even raise payments in the future. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. 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. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Taking the debate a bit further, we've identified 2 warning signs for First United that investors need to be conscious of moving forward. Is First United 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.
