Fulton Financial Corporation (NASDAQ:FULT) has pleased shareholders over the past 10 years, by paying out dividends. The company is currently worth US$2.7b, and now yields roughly 3.5%. Does Fulton Financial tick all the boxes of a great dividend stock? Below, I'll take you through my analysis.
Here's how I find good dividend stocks
When researching a dividend stock, I always follow the following screening criteria:
- Is it the top 25% annual dividend yield payer?
- Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?
- Has dividend per share amount increased over the past?
- Is is able to pay the current rate of dividends from its earnings?
- Will it have the ability to keep paying its dividends going forward?
How well does Fulton Financial fit our criteria?
Fulton Financial has a trailing twelve-month payout ratio of 40%, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting a payout ratio of 41% which, assuming the share price stays the same, leads to a dividend yield of 3.7%. Furthermore, EPS should increase to $1.41.
When assessing the forecast sustainability of a dividend it is also worth considering the cash flow of the business. A company with strong cash flow, relative to earnings, can sometimes sustain a high pay out ratio.
If there's one type of stock you want to be reliable, it's dividend stocks and their stable income-generating ability. In the case of FULT it has increased its DPS from $0.12 to $0.56 in the past 10 years. During this period it has not missed a payment, as one would expect for a company increasing its dividend. These are all positive signs of a great, reliable dividend stock.
In terms of its peers, Fulton Financial produces a yield of 3.5%, which is high for Banks stocks but still below the market's top dividend payers.
Keeping in mind the dividend characteristics above, Fulton Financial is definitely worth considering for investors looking to build a dedicated income portfolio. Given that this is purely a dividend analysis, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. Below, I've compiled three essential aspects you should further examine:
- Future Outlook: What are well-informed industry analysts predicting for FULT’s future growth? Take a look at our free research report of analyst consensus for FULT’s outlook.
- Valuation: What is FULT worth today? Even if the stock is a cash cow, it's not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether FULT is currently mispriced by the market.
- Other Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.
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If you spot an error that warrants correction, please contact the editor at email@example.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. Thank you for reading.