Have you been keeping an eye on The First Bancorp Inc’s (NASDAQ:FNLC) upcoming dividend of $0.24 per share payable on the 31 January 2018? Then you only have 9 days left before the stock starts trading ex-dividend on the 05 January 2018. What does this mean for current shareholders and potential investors? Below, I will explain how holding First Bancorp can impact your portfolio income stream, by analysing the stock’s most recent financial data and dividend attributes. See our latest analysis for First Bancorp
5 questions to ask before buying a dividend stock
Whenever I am looking at a potential dividend stock investment, I always check these five metrics:
- Does it pay an annual yield higher than 75% of dividend payers?
- 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?
- Does earnings amply cover its dividend payments?
- Will the company be able to keep paying dividend based on the future earnings growth?
How well does First Bancorp fit our criteria?
The current payout ratio for the stock is 53.63%, meaning the dividend is sufficiently covered by earnings. Furthermore, analysts have not forecasted a dividends per share for the future, which makes it hard to determine the yield shareholders should expect, and whether the current payout is sustainable, moving forward. If dividend is a key criteria in your investment consideration, then you need to make sure the dividend stock you’re eyeing out is reliable in its payments. In the case of FNLC it has increased its DPS from $0.72 to $0.96 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. Relative to peers, First Bancorp has a yield of 3.34%, which is on the low-side for banks stocks.
What this means for you:
Are you a shareholder? With First Bancorp producing strong dividend income for your portfolio over the past few years, you can take comfort in knowing that this stock will still continue to be a robust dividend generator moving forward. However, depending on your current holdings, it may be worth exploring other dividend stocks to improve your diversification, or even look at high-growth stocks to complement your steady income stocks. I encourage you to continue your research by checking out my interactive free list of dividend rockstars as well as high-growth stocks to potentially add to your holdings.
Are you a potential investor? Taking into account the dividend metrics, First Bancorp ticks most of the boxes as a strong dividend investment, putting it in my list of top dividend payers. As always, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. Another aspect to consider is how much it’s actually worth. Is First Bancorp overvalued or is it actually a bargain? Dig deeper in our latest free analysis to find out!
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.