Here's What We Like About 1st Source's (NASDAQ:SRCE) Upcoming Dividend
1st Source Corporation (NASDAQ:SRCE) stock is about to trade ex-dividend in 4 days. This means that investors who purchase shares on or after the 2nd of November will not receive the dividend, which will be paid on the 13th of November.
1st Source's next dividend payment will be US$0.28 per share. Last year, in total, the company distributed US$1.12 to shareholders. Calculating the last year's worth of payments shows that 1st Source has a trailing yield of 3.3% on the current share price of $33.89. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. As a result, readers should always check whether 1st Source has been able to grow its dividends, or if the dividend might be cut.
See our latest analysis for 1st Source
Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. 1st Source is paying out just 9.7% of its profit after tax, which is comfortably low and leaves plenty of breathing room in the case of adverse events.
Companies that pay out less in dividends than they earn in profits generally have more sustainable dividends. The lower the payout ratio, the more wiggle room the business has before it could be forced to cut the dividend.
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If earnings fall far enough, the company could be forced to cut its dividend. With that in mind, we're encouraged by the steady growth at 1st Source, with earnings per share up 6.7% on average over the last five years.
The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. In the past 10 years, 1st Source has increased its dividend at approximately 7.5% a year on average. It's encouraging to see the company lifting dividends while earnings are growing, suggesting at least some corporate interest in rewarding shareholders.
To Sum It Up
Is 1st Source an attractive dividend stock, or better left on the shelf? 1st Source has seen its earnings per share grow slowly in recent years, and the company reinvests more than half of its profits in the business, which generally bodes well for its future prospects. In summary, 1st Source appears to have some promise as a dividend stock, and we'd suggest taking a closer look at it.
Curious what other investors think of 1st Source? See what analysts are forecasting, with this visualisation of its historical and future estimated earnings and cash flow.
A common investment mistake is buying the first interesting stock you see. Here you can find a list of promising dividend stocks with a greater than 2% yield and an upcoming dividend.
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. 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.
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