Readers hoping to buy The First Bancorp, Inc. (NASDAQ:FNLC) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. Ex-dividend means that investors that purchase the stock on or after the 4th of October will not receive this dividend, which will be paid on the 22nd of October.
First Bancorp’s next dividend payment will be US$0.3 per share, on the back of last year when the company paid a total of US$1.2 to shareholders. Looking at the last 12 months of distributions, First Bancorp has a trailing yield of approximately 4.4% on its current stock price of $27.46. We love seeing companies pay a dividend, but it’s also important to be sure that laying the golden eggs isn’t going to kill our golden goose! As a result, readers should always check whether First Bancorp has been able to grow its dividends, or if the dividend might be cut.
View our latest analysis for First Bancorp
Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. First Bancorp is paying out an acceptable 51% of its profit, a common payout level among most companies.
Generally speaking, the lower a company’s payout ratios, the more resilient its dividend usually is.
Click here to see how much of its profit First Bancorp paid out over the last 12 months.
Have Earnings And Dividends Been Growing?
Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. Fortunately for readers, First Bancorp’s earnings per share have been growing at 14% a year for the past five years.
Many investors will assess a company’s dividend performance by evaluating how much the dividend payments have changed over time. First Bancorp has delivered 4.4% dividend growth per year on average over the past ten years. It’s good to see both earnings and the dividend have improved – although the former has been rising much quicker than the latter, possibly due to the company reinvesting more of its profits in growth.
To Sum It Up
Has First Bancorp got what it takes to maintain its dividend payments? Earnings per share are growing nicely, and First Bancorp is paying out a percentage of its earnings that is around the average for dividend-paying stocks. In summary, First Bancorp appears to have some promise as a dividend stock, and we’d suggest taking a closer look at it.
Want to learn more about First Bancorp’s dividend performance? Check out this visualisation of its historical revenue and earnings growth.
If you’re in the market for dividend stocks, we recommend checking our list of top dividend stocks with a greater than 2% yield and an upcoming dividend.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.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.